pg 22. INTERVIEW: Dr. Ganesh Natarajan, VC & CEO...

1ST - 30TH Apr 2015 . Vol 2 Issue 3 . For Private Circulation Only

pg 22. INTERVIEW: Dr. Ganesh Natarajan, VC & CEO, Zensar Tech.

pg 24. Indian Economy – Trend indicators

3GROUND VIEW GROUND VIEW 1 - 30 Apr 2015 1 - 30 Apr 2015 2

VOL 2 . ISSUE 3 . 1ST - 30TH APR 2015

Vineet Bhatnagar- Managing Director and CEO

EDITORIAL BOARD:Naveen Kulkarni, Manish Agarwalla, Kinshuk Bharti Tiwari

COVER & MAGAZINE DESIGN Chaitanya Modak, www.inhousedesign.co.in

FOR EDITORIAL QUERIES:PhillipCapital (India) Private LimitedNo. 1, 18th Floor, Urmi Estate, 95 Ganpatrao Kadam Marg, Lower Parel West, Mumbai 400 013

RESEARCH Automobiles Dhawal Doshi, Priya Ranjan

Banking, NBFCs Manish Agarwalla, Pradeep Agrawal, Paresh Jain

Consumer, Media, Telecom Naveen Kulkarni, Jubil Jain, Manoj Behera

Cement Vaibhav Agarwal

Economics Anjali Verma

Engineering, Capital Goods Ankur Sharma, Hrishikesh Bhagat

Infrastructure & IT Services Vibhor Singhal, Deepan Kapadia

Metals Dhawal Doshi, Ankit Gor

Mid-caps Vikram Suryavanshi

Oil & Gas, Agri Inputs Gauri Anand, Deepak Pareek

Pharmaceuticals Surya Patra, Mehul Sheth

Retail, Real Estate Abhishek Ranganathan, Rohit Shroff

Portfolio Strategy Anindya Bhowmik

Technicals Subodh Gupta

Production Manager Ganesh Deorukhkar

Database Manager Deepak Agrawal

Sr. Manager – Equities Support Rosie Ferns

SALES & DISTRIBUTION Ashvin Patil, Shubhangi Agrawal, Kishor Binwal, Sidharth Agrawal, Bhavin Shah, Varun Kumar, Narayan Mulchandani

CORPORATE COMMUNICATIONS Zarine Damania

[email protected]

GROUND VIEW - PREVIOUS ISSUES

1st Sep 2014 Issue 9

15th Nov 2014 Issue 11

1st Feb 2015 Issue 2 1st Jan 2015 Issue 1

1st Oct 2014 Issue 10

16th Dec 2014 Issue 12


4. COVER STORY: Not enough credit in the wallet

Ground View explores the opportunity ahead for payment banks and its impact on existing industry players like commercial bank and NBFCs

22. INTERVIEW: Dr. Ganesh Natarajan

Is ex-chairman of NASSCOM and currently the Vice Chairman & CEO of Zensar Technologies. We spoke to him about the growth prospects of the Indian IT Services companies, NASSCOM annual growth estimates and overall trends in the industry.

24. Indian Economy – Trend indicators

26. PhillipCapital Coverage Universe: Valuation Summary

LETTER FROM THE MANAGING DIRECTORIn an endeavour to provide ubiquitous access of

payment Services and deposit Products to small

businesses and low income households, the central

bank’s initiated to add new vertical in the banking

value chain called “payment bank”. This vertical will

include large section of population, especially the

low income household, migrant labour force and

economically weaker section under the net of basic

banking services and financial products. Along with

financial inclusion, the primary objective of pay-

ment banks will also be to facilitate high volume

and low value transactions in deposit, remittance

and payments, that will be driven through cost

efficient technology.

The payment bank’s business model would evolve

around payment solution as the restriction on

lending activity would put a cap on its intermedia-

tion business. The sheer size of market opportunity

available in payment services vertical and com-

pressed intermediation margin does not seem to

be a very exciting proposition. Despite this, the

level of participation for payment bank license is

immense. The advent of new vertical in financial

value chain would complement commercial bank’s

presence in the market. Our cover story on Pay-

ment Bank penned by analyst Manish Agarwalla

explores the opportunity ahead for payment banks

and its impact on existing industry players like com-

mercial bank and NBFCs.

Also read in this issue discussion with Dr. Ganesh

Natarajan, ex-chairman of NASSCOM and currently

the Vice Chairman & CEO of Zensar Technologies.

We spoke to him about the growth prospects of the

Indian IT Services companies, NASSCOM annual

growth estimates and overall trends in the industry.

Best Wishes

Vineet

CONTENTS


Villager depositing money at BC outlet


COVER STORY

Umesh Bhatka, a migrant worker in the textile mills in the industrial city of Surat sends

money to its native village in Ganjam district in Orissa. The money takes a time consuming

complicated route to reach his family. The money is dispatched through people from his

community who travel to his village. Many a times some amount goes missing. Ramadhir

kumar again a migrant worker at a construction site, keeps his wage with the contractor (for

safe keeping), which he draws when he visits his native place. The contractor charges undue

amount for just safe keeping. There are many such cases as migrant workers do not visit

bank branch due to limited financial literacy; lack of proper documentation;complexity; and

inaccessibility.

There is a need for commercial bank to shift the bulk of low-value transactions to a much

lower-cost and more ubiquitous retail channel, which makes for a significantly more

compelling business case to serve the poor. The key is to leverage corner shops/merchant

establishment that can be found in every village and in every neighbourhood. The payment

bank initiative by the central bank is an attempt to provide Ubiquitous Access to Payment

Services and Deposit Products at Reasonable Charges. “Not enough credit in the wallet”

is an indepth study of the potential opportunity for payment banks and its impact on other

participants in financial value chain like commercial banks and NBFCs

pg. 6 Financial Inclusion Foremost priority of policy maker___________________________________________________pg.8 Payment Bank Model An endeavour to provide Ubiquitous Access to basic banking services___________________________________________________pg.18 Potential market size Payment bank – enticing interest across industry segment – However motive defers___________________________________________________pg.19 Challenges and Key Success factors Little margin of error___________________________________________________

BY MANISH AGARWALLA, PRADEEP AGRAWAL & PARESH JAIN


Providing low-income households and

small businesses with access to financial

services is not a new goal for India. Policy

makers are well aware of its importance

and have been very willing to learn from the

successful experiences of other countries and

to experiment with new ideas. However, pro-

F I N A N C I A L I N C L U S I O N

Foremost priority of policy maker

gress on this front leaves much to be desired.

When financial inclusion goals are specified and

strategies articulated, there is little consideration

of credit risk and cost to serve. Consequently,

the Nachiket Mor Committee report aimed to

address issues of credit risks and costs to serve

for providing better access of financial services

The banking system design in any economy can be char-

acterised as a horizontally differentiated banking system

(HDBS) and a vertically differentiated banking system

(VDBS). A well-functioning financial system has insti-

tutions that collectively meet the needs of the country

while enhancing the stability of the system as a whole.

Fortunately, in India, many elements referred to and ex-

perience with multiple kinds of banking system designs

exist. For example, India has significant experience of

both the national bank and the regional bank design.

There is a robust set of NBFCs and several PPIs are

active. What is required is to evaluate these experiences

systematically and accelerate the growth of the designs

that seem to hold promise for financial inclusion and that

are consistent with the design principles. Additionally,

there is need to enable significant partnerships between

institution types that leverage each of their strengths

Banking system design

Categories Characteristics Example

National bank with Branches / agents Deposit, Credit, payment, etc (full service) PAN India SCBs like SBI, ICICI Bank, HDFC Bank, PNB, BOB etc

Regional Banks Deposit, Credit, payment, etc (full service) RRBs, Old private sector banks

National - Consumer Bank Deposit, Credit NBFCs like Bajaj finance, STFC etc & Housing finance companies

National - Wholesale Bank Deposit, Credit IDFC, PFC, REC etc

Horizontally differentiated banking system

Categories Characteristics Example

Payment network operators Payments VISA, MasterCard, FINO, NPCI, BCs, Whitelevel ATMs

Payment Banks Payments M-Pesa, Airtel Money, Oxigen (in India these are nested payment banks)

Full service Banks Deposit, Credit, payment, etc (full service) PAN India SCBs like SBI, ICICI Bank, HDFC Bank, PNB, BOB etc

National - Consumer Bank Deposit, Credit NBFCs like Bajaj finance, STFC etc & Housing finance companies

National - Wholesale Bank Deposit, Credit IDFC, PFC, REC etc

Vertically differentiated banking system


to small businesses and low-income households.

The committee recommends six vision statements

on financial inclusion.

1. Universal Electronic Bank Account (UEBA)

2. Ubiquitous Access to Payment Services and

Deposit Products at Reasonable Charges

3. Sufficient Access to Affordable Formal Credit

4. Universal Access to a Range of Deposit and

Investment Products at Reasonable Charges

5. Universal Access to a Range of Insurance and

Risk Management Products at Reasonable

Charges

6. Right to Suitability

The vision statement for Ubiquitous Access to

Payment Services and Deposit Products at

Vision Goal

A Universal Electronic Bank Account Each Indian resident, above the age of 18

Ubiquitous Access to Payment Services and Deposit Products at Reasonable Charges

Full services access point within a fifteen minute walking distance from every household in India

Reasonable Charges

At least one product with positive real returns

Sufficient Access to Affordable Formal Credit Credit to GDP Ratio in every District of India to cross 10%

Credit to GDP Ratio in every District of India to cross 50%

Credit to GDP Ratio for every \significant. sector of the economy to cross 10%

Credit to GDP Ratio for every \significant. sector of the economy to cross 50%

Convenient Access

Affordable Rates

Universal Access to a Range of Deposit and Investment Products at Reasonable Charges

Deposit & Investments to GDP Ratio in every District of India to cross 15%

Deposit & Investments to GDP Ratio in every District of India to cross 65%

Reasonable Charges

Universal Access to a Range of Insurance and Risk Man-agement Products at Reasonable Charges

Total Term Life Sum Assured to GDP Ratio in every District of India to cross 30%

Total Term Life Sum Assured to GDP Ratio in every District of India to cross 80%

Reasonable Charges

Right to Suitability

All financial institutions to have a Board approved Suitability Policy.

Presence of district level redressal offices for all customers availing any financial service

Vision statement on financial inclusion - Nachiket Mor Committee recommendation

Reasonable Charges for small businesses and

low-income households is as follows.

By January 1, 2016, the number and distribution

of electronic payment access points would be such

that every resident would be within a 15-minute

walking distance from such a point anywhere in

the country. Each such point would allow residents

to deposit and withdraw cash to and from their

bank accounts and transfer balances from one

bank account to another, in a secure environment,

for both very small and very large amounts, and

pay reasonable charges for all of these services.

At least one of the deposit products accessible to

every resident through the payment access points

would offer a positive real rate of return over the

consumer price index.


the payment bank. The goal of the central bank

is to provide basic banking services to 450,000

unbanked villages. The payment bank will des-

ignate merchant establishments / corner shop

as its access points on the pay- and-use model.

This access point will address the issue of costly

brick-and-mortar branches and offer low cost and

easy access to the customer. From the merchant

establishments’ point of view it is an additional

source of revenue and increase in footfalls in his

establishment.

1. Acceptance of demand deposits (current de-

posits, and savings bank deposits). Payments

banks will initially be restricted to holding a

maximum balance of Rs. 100,000 per customer.

After the performance of the Payments bank is

gauged by the RBI, the maximum balance can

be raised. KYC norms are also simplified for

small value transaction limited transaction.

2. Payments and remittance services through

various channels including branches, BCs

and mobile banking. The payments / remit-

tance services would include acceptance of

funds at one end through various channels

including branches and BCs and payments of

cash at the other end, through branches, BCs,

and Automated Teller Machines (ATMs) and

point of sale terminal.

3. Issuance of PPIs as per instructions issued

from time to time under the PSS Act.

Umesh Bhatka, a migrant worker in the

textile mills in the industrial city of

Surat sends money to its native village

in Ganjam district in Orissa. The mon-

ey takes a time consuming complicated route

to reach his family. The money is dispatched

through people from his community who travel

to his village. Many a times some amount goes

missing. Ramadhir kumar again a migrant worker

at a construction site, keeps his wage with the

contractor (for safe keeping), which he draws

when he visits his native place. The contractor

charges undue amount for just safe keeping.

There are many such cases as migrant workers do

not visit bank branch due to limited financial lit-

eracy; lack of proper documentation; complexity;

and inaccessibility (due to limited banking hour).

In an endeavour to provide ubiquitous access of

payment services and deposit products to small

businesses and low-income households, the

central bank initiated a vertical in the banking

value chain called “payment bank”. This vertical

aims to cover a large section of the population,

especially low-income households, migrant labour

and economically weaker sections under the net

of basic banking services and financial products.

Along with financial inclusion, the primary ob-

jective of payment banks will also be to facilitate

high volume and low value transactions in deposit,

remittance and payments, driven through cost-effi-

cient technology.

The concept of the payment bank in not new in

India and some of its basic functions are similar to

pre-paid payment instruments or the business-cor-

respondent model. Due to difficulties faced by

such entities and the risk associated with the

model, the central bank promoted the concept of

PA Y M E N T B A N K M O D E L

An endeavour to provide Ubiquitous Access to basic banking services

Scope of payment bank


4. Internet banking - The RBI is also open to

applicants transacting primarily using the Inter-

net.

5. Functioning as Business Correspondent

(BC) of other banks – A Payments bank may

choose to become a BC of another bank for

credit and other services which it cannot offer.

6. The Payments bank cannot undertake lend-

ing activities. Apart from amounts maintained

as Cash Reserve Ratio (CRR) with RBI, it will be

required to invest all its monies in Government

securities/Treasury Bills with maturity up to one

year that are recognized by RBI as eligible se-

curities for maintenance of Statutory Liquidity

Ratio (SLR).

Capital requirement. Since the payment banks

will not be allowed to assume any credit risk,

and if its investments are held to maturity, such

investments need not be marked to market and

there may not be need for capital for market risk.

However, the payment banks will be exposed to

operational risks. They will also be required to

invest heavily in technological infrastructure for

operations. The capital will be used to create such

fixed assets. Therefore, the minimum paid-up

voting equity capital of a payment bank shall be

Rs1 bn. The payment bank shall be required to

maintain a minimum capital adequacy ratio of 15%

of its risk weighted assets (RWAs) on a continuous

basis, subject to any higher percentage as may be

prescribed by the RBI from time to time. However,

as payment banks are not expected to deal with

sophisticated products, the capital adequacy ratio

will be computed under simplified Basel I stand-

ards.

As payment banks will have almost zero or negligi-

ble RWAs, its compliance with a minimum capital

adequacy ratio of 15% would not reflect the true

risk. Therefore, the bank should have a leverage

ratio of not less than 5%—its outside liabilities

should not exceed 20 times its networth/paid-up

capital and reserves.

Promoter’s contribution. The promoter’s min-

imum initial contribution to the paid-up voting

equity capital of a payment bank shall be at least

40%, which shall be locked in for five years from

the date of commencement of business of the

bank. Shareholding by promoters in the bank in

excess of 40% shall be brought down to 40% with-

in three years of the date of commencement of

business of the bank. Further, the promoter’s stake

should be reduced to 30% of the paid-up voting

equity capital of the bank within 10years, and to

26 % within 12 years from the date of commence-

ment of business of the bank. Proposals with a

diversified shareholding and time frame for listing

are preferred.

Foreign shareholding. The foreign shareholding

in the bank would be as per the extant FDI policy.

Voting rights and transfer/acquisition of shares.

As per Section 12 (2) of the Banking Regulation

Act, 1949, voting rights in private sector banks are

capped at 10%, which can be raised to 26% in a

phased manner by the RBI. Further, as per Section

12B of the Act, any acquisition of 5% or more of

voting equity shares in a private sector bank will

require prior approval of the RBI. This will also

apply to payment banks.

Prudential norms. As payment banks will not have

loans and advances in their portfolios, they will

not be exposed to credit risks and the prudential

norms and regulations of the RBI as applicable

to loans and advances, will therefore not apply

to them. However, the banks will be exposed to

operational risks and should establish a robust op-

erational risk-management system. They may face

liquidity risks and therefore are required to follow

the RBI’s guidelines on liquidity-risk management,

to the extent applicable.

Regulatory norms


There is need for transactions and savings ac-

counts for the under-served in the population.

Also, remittances have both macro-economic

benefits for the region receiving them as well as

micro-economic benefits for the recipients. Higher

transaction costs of making remittances diminish

these benefits. Therefore, the primary objective

of setting up of payment banks is to enhance

financial inclusion by providing (i) small savings ac-

counts and (ii) payments/remittance services to the

migrant labour workforce, low-income households,

small businesses, other unorganised-sector enti-

ties and other users, by enabling high volume and

low value transactions in deposits and payment/

remittance services in a secured technology-driven

environment.

Apart from web-based and mobile app-based

banking services, the payment bank would des-

ignate various merchant establishments / corner

stores as its access points on the pay-and-use

model. The merchant establishments / corner

stores, unlike costly brick-and-mortar branches,

will offer easy and low cost access to the customer.

From the merchant establishments’ point of view,

it is an additional source of revenue and increase

in footfalls in his establishment.

Banking beyond branches is about shifting the

bulk of low-value transactions to a much low-

er-cost and more ubiquitous retail channel, which

makes for a significantly more compelling business

case to serve the poor. The key is to leverage

corner shops/merchant establishment that can

be found in every village and in every neighbour-

hood. In much the same way as shops exchange

their pre-purchased inventory of rice or cooking

oil against cash, they can also exchange their own

bank balance against cash (and vice versa). This

can be done safely as long as the store takes in

and pays back customers’ cash against an equal

and simultaneous electronic transfer of value

between the bank accounts of the customer and

the store. The payment bank must put in place

a technology platform (which can be based on

cards, biometrics or mobile phones) through which

it can authorize and record each transaction in real

time, thereby ensuring that all client transactions

are fully funded before the customer leaves the

store.

A retail store’s business is to buy a stock of a good

that people want –let’s call it rice—and to resell it

in smaller amounts. Through this process, it stead-

ily reduces its stock of rice and increases its stock

of cash. When the cash inventory is depleted, the

store needs to take some of its cash and exchange

it for a fresh supply or rice.

Substituting “electronic money” or “bank bal-

ance” for rice, and the same mechanics apply for

its bank reselling business. The store starts with a

balance of electronic money in its bank account,

and when a customer walks into the store to make

a deposit, the store transfers electronic value to

the customer in exchange for cash. When it runs

out of bank balance, the store can no longer fund

more customer deposits and it must go to the

bank to re-stock on electronic money using the

cash it has received from customers. A customer

withdrawal is the same operation but in reverse.

Thus, the only difference with the rice merchant is

that the cash merchant can buy as well as sell elec-

tronic money for cash, i.e. it can conduct deposits

as well as withdrawals.

Normal stores can thus act as cash merchants,

aggregating the cash needs of customers so that

only the shopkeeper, and not the entire commu-

nity, has to travel to a branch in order to service

their account. Cash merchants handle the logistics

of local cash distribution, in effect bridging the

distance between the bank branch (acting as a

kind of wholesale cash aggregation point for cash

merchants) and the places where poor people live

and work. The store is paid a small commission

per transaction served, making this a variable-cost

transactional channel for the bank and at the

same time a profitable new line of business for the

shopkeeper / merchant establishment. The bank

retains full control over the customer proposition,

the marketing of the service, and in ensuring the

safety and soundness of the IT platform and risk

management policies.

Business model


Currently PPI issuers and business correspondents

use biometric scanners to allow their customers to

make remittances. A customer who wants to remit

funds to another individual (receiver), needs to

walk into the centre and authenticate his identity

by using the thumb impression in a biometric

scanner. After verification, the customer deposits

the money at the centre and in turn the centre

manager will credit the receiver’s wallet from his

own wallet and later deposit the money re-

ceived in his account. Another way of making the

remittance is that the customer directly transfers

the money from his own wallet to the intended

receiver’s wallet after the identity is authenticated.

In this process, there is no handling of cash by the

centre manager, only the customer’s wallet is deb-

ited and the intended receiver’s wallet is credited

immediately.

Due to restriction in lending activity, the spread

earned by payment banks is expected to be very

thin and hence the entire business model would

evolve around payment services. In order to

enable a low cost easy access to the customer, the

model would be similar to a banking correspond-

ent model, wherein the payment bank would

appoint merchant establishments / corner shops

as its access point enabled by strong IT support.

The advantage which payment banks would have

compared to business correspondents or PPIs is

that, under payment bank model cash out from

merchant establishments / corner shops would be

allowed, thus removing the major hindrance faced

by BCs & PPIs.

Thin Intermediation margin

A competitive deposit product is a pre-requisite

for customer acquisition, which is crucial to a

stable remittance business. But the restriction on

lending activity would put a cap on its ability to

provide higher interest on its deposit product.

However the deposit product offered by payment

banks is expected to provide interest rates higher

than the prevailing market rate in savings deposits.

Large commercial banks provide 4.5% interest on

saving deposits.

Theoretically, a payment banks margin should not

be more than margin of SCB adjusted for credit

risk, tenure premium and high operating cost.

Long term credit risk adjusted margin of top six

commercial banks is averaged at 230bps. The

seven year average tenure premium between 1

year and 5 year corporate bond is 40bps. Oper-

ating cost of SCBs would average at 2% of asset.

The transaction cost in alternate banking model is

30%-40% of cost incurred under branch banking

model. Hence opex under agency / franchisee

model can be around 80bps compared to 200bps

opex (operating cost to asset ratio) under branch

banking model. The upper limit of margin for

payment bank is expected to around 100bps (i.e.

230bps credit risk adjusted margin - 40bps tenure

premium - 100bps opex). However the actual

margin would depend on the individual company’s

business model and market dynamics (which again

will depend on number of new licensees).

Current shortcomings of existing Pre-paid Instrument Issuer (PPI) model and business correspondent model1. The most important concerns pertaining to PPI model is the opacity of the Nested business model. Currently, the PPI are

not required to maintain any capital requirement. In addition the PPIs runs the risk of the sponsor bank getting insolvent with which it holds the escrow account and the sponsor bank runs the risk of operating quality and the likelihood of a run on its PPIs banking system design.

2. PPIdoesn’tofferinteresttothecustomersonthebalancesmaintainedinthewallet/Account.Sothereforefromafinancialinclusion point of view, this doesn’t help the poor people and small businessmen save their money.

3. Business correspondent model also faces the similar risk. In the absence of a regulator for BCs and capital requirement, the trust of the sponsor bank has always been low. Also, the sponsor bank does not control the pricing of the product and services offered by the BC, thus exposing them to criticism by the regulator. Past experience puts a question mark on the scalability of both the models.


Strong reliance on payment solution

The payment bank model would revolve around

low cost payment solution for small ticket transac-

tion. Payment solution would include

a. Domestic remittance services

b. Cash ins and Cash outs services

c. Airtime top-up and related recharge services

d. Utility bill payments

Domestic household remittance market is pegged

at Rs2000bn per annum, growing at CAGR of

~12%. According to industry surveys, 40% of

the domestic remittance business is channelized

through formal sources like commercial banks;

banking correspond (BC) and post office etc.

The informal system which operates primarily

through friends and family, couriers, bus services,

hawala channels and in-person transfers, is still

Payment bank NIM Scenario

Leverage (times networth)

10x 15x 20x

Interest on deposit (%)

5 1.95 1.79 1.7

6 1.04 0.85 0.75

7 0.13 -0.09 -0.2Source: PhillipCapital India Research

A scenario analysis

Major route Estimated migrant workers

(mn)

Annual remittance by migrant

workers (Rsbn)

Average Montly

remittance per worker

(Rs)

Surat/Daman - Orissa 2.0 168 7000

Mumbai - Bihar / UP 10.0 720 6000

Delhi - Bihar / UP 8.0 576 6000

Kerala - West Bengal 0.2 18 6500

Tamil Nadu - Orissa / Bihar 0.3 20 6000Source: Oxygen

Major household remittance route in India

widely preferred over the formal financial system.

Migrants prefer informal channels for a variety

of reasons which among others include costs in-

curred in making transfers, and opportunity costs.

Even access to the formal financial system is not

sufficient to ensure its usage. Migrants may simply

refuse to use the channel due to low levels of fi-

nancial literacy, lack of penetration in the home re-

gion, and time consuming process. Intuitively, the

lower a person is placed in the income distribution

ladder the more likely is he/she to be excluded

from the financial system or be more dependent

on the informal system.

Transferring money through informal sources is

inconvenient and more time consuming and risky.

Rural Urban All India

Friend/family member 30.8 18.8 29.2

Money transfer (Western Union) 2.2 4.4 2.5

Bank 36 53.8 38.3

Post office 5.2 3.3 4.9

Courier 2.4 0.2 2.1

Bus service 0.2 0 0.2

In person 22.8 19.2 22.4

Others 0.4 0.3 0.4

All 100 100 100Source: NCAER

Mode of money transfer

Average Number of days taken for the money to reach the recipient

Source: NCAER


For example, money is transferred free of charge

through friends or relatives who are travelling back

to a migrant’s home town. Similarly, cash couriers

operating in specific migration corridors whose

livelihood are to travel and physically deliver cash

for migrants are another choice for making the

transfers. Migrants may also prefer to transfer the

amount themselves during trips to their own vil-

lages and towns for social occasions and between

Received Sent

Bihar 46 21

Uttar Pradesh 29 15

Uttarakhand 4 5

West Bengal 4 2

Rajasthan 3 5

Jharkhand 3 6

Orissa 2 5

Punjab 1 1

Maharashtra 1 8

Madhya Pradesh 1 7

Tamil Nadu 1 7

Rest 4 18Source: NCAER

Distribution of Remittent Households across Major States

STATES Sent Received

Punjab 1.7 0.5

Rajasthan 0.2 0.3

Uttar Pradesh 0.1 0.2

Bihar 1 1

West Bengal 0.4 0.3

Jharkhand 0.8 0.5

Orissa 1.2 0.6

Madhya Pradesh 0.1 0.2

Total 0.7 0.6Source: NCAER

Cost of Money transfer (percent to amount remitted)

Vvarious channels (remittance cost on Rs5000)

% to transaction value

Money Order, India Post 0.50%

Business correspondent of SBI 2%

Airtel Money 0.50%Source: RBI

Indicative cost of transaction on domestic remittance

The domestic household remittance market

offers a market opportunity of Rs20bn in terms of

revenue, factoring a commission rate of 1% (0.5%

on both side of the transaction sender & receiver).

The Rs12bn( 60%) unorganised market remains

the potential market for payment bank and other

organised player in the financial value chain like

PPIs, business correspondent, small banks etc.

Customer queue at SBI Tatkal

jobs. Although the formal financial

system does offer security, speed, and

cost effectiveness, attributes that are

cherished by the migrants, the system

has cumbersome documentation

procedures, is often inconvenient and

does not have deep enough penetra-

tion.


The only other comparable country of India’s size

with a large internal migrant population is China.

A few studies estimate that the Chinese domestic

remittances market is nearly three times the size of

the Indian market. However, the crucial point that

needs to be mentioned is that the formal sector

in China accounts for 75% of the total remittances

market transactions as opposed to less than 40%

Key Services offered Commission rates

BFSI

Deposit 0.30%

Withdrawal 0.30%

Fund transfer Rs8 Per transfer

B2C

Light Bill Rs3/ Bill

DTH Customers 0.30%

Mobile Recharge 0.30%

G2C

Gas Subsidy -

Indra Awas Yojna -

NAREGA Job Card -

Financial products

LIC -

Total Earning/ Rural centre Rs 5000-20000Source: Vakrangee

Various financial services and commission rate charged by a retail centre of a business correspondent in a village with population of 5000

PPI (Paytm) offers various payment solutions


M-Pesa, a mobile money transfer service, innovated

by the Vodafone group, was first launched in Kenya in

March 2007 through Safaricom, a leading mobile oper-

ator in Kenya. It was initially designed to facilitate dis-

bursement and repayment of microfinance loans through

the mobile phone to reduce the cost associated with

handling cash and increasing efficiency. After the com-

pletion of pilot testing M-Pesa services were launched to

facilitate money transfers.

How M-Pesa works

M-Pesa is an SMS-based system that enables users to

deposit, send and withdraw funds, using their mobile

phones. It does not pay interest on deposits maintained

in the account and does not offer loans. Customers are

not required to have a bank account and can open an

account, transact with agents appointed by M-Pesa to

deposit and withdraw money. Customers find it conven-

ient to transact though M-Pesa, given the network of

over 80,000 agents.

M-Pesa initially started basic services like domestic and

International remittances, bill payments and airtime top-

ups. Subsequently it evolved into a complete mobile

money service with facilities such as

• ATM withdrawals

• Opening of interest paying savings accounts

• Offering other financial products like insurance and

credit facilities

• Making on-premise retail payments for buying goods

and services

• Mobile ticketing and payment of services for con-

certs and events

• Offering accounts to companies with higher trans-

action limits, which can be used to make bulk B2C

payments and through which they can receive funds

and bill payments.

Reasons for the acceptance of M-Pesa

Lower access to financial services. The access to finan-

cial services in Kenya has been low. During the launch

of the service only 19% of the population had access to

formal financial services. The country’s 31 mn people

had about five million accounts.

Huge demand for remittance services. Due to lack of

availability of remittance services at a reasonable cost

and need for reduced dependence on cash for security

reasons, the acceptability of M-Pesa services was a suc-

cess. Also it is a common practice in Kenya for migrant

workers in urban places to send back money to their

families in villages.

Adoption of technology. Prior to the launch of M-Pesa

services mobile phone penetration was considerable,

with 83% of the population aged above 15 years having

access to mobile phone technology and most being

familiar with the basic operations of making voice calls

and texting.

First mover advantage. Safaricom, being a familiar and

trusted brand, was the first telecom operator to launch

a mobile technology-based banking service in Kenya,

making it easy for the telecom operator to capture a

large market share.

Conducive regulatory environment. The Central Bank

of Kenya understood the need for efficient and low cost

remittance services, so it allowed telecom operators to

offer banking services without partnering with banks.

Advantages of M-Pesa mobile money services to

financial institutions

• M-Pesa services enabled financial institutions like

banks and micro-finance institutions (MFIs) to achieve

considerable reduction in transaction costs and

increase staff efficiency. Earlier an MFI disbursing

loans though branches/groups had to bear huge cost

on cash logistics and insurance. An MFI disbursing

loans through cheque is charged for each clearing.

Through the B2C service, MFIs need to deposit

the money in their M-Pesa accounts and can easily

disburse the loan amount at a lower cost. Similarly,

bank branches can accept deposits or receive loan

repayments through M-Pesa and reduce or avoid ex-

Case study: M-Pesa


penses for branch infrastructure, manpower,

equipment and security expenses.

• The M-Pesa platform allows FIs to de-con-

gest their banking offices, allowing the

staff more time to focus on product sales,

business development, customer acquisition

and related activities, without worrying much

about cash management, deposits, with-

drawals and disbursement services.

Advantages of M-Pesa to customers

• Customers availing of M-Pesa services can

avoid travelling long distances to transaction

their account or to fill in bank forms and

queue up to deal with tellers and cashiers.

They just need to deposit the money in their

M-Pesa account at the nearest M-Pesa agent

and transfer money to their bank accounts.

This helps users to save time and travel

expenses and avoid the risk of carrying cash.

Challenges faced by FIs of M-Pesa to FIs and

customers

• A few FIs claim that one of the biggest

challenges has been in reconciling M-Pesa

deposits in their customers’ accounts, fol-

lowed by a lag in Safaricom crediting funds,

resulting in customers being unable to with-

draw money. The reconciling problem occurs

mainly due to system errors and poor integration of software

between the Safaricom and the FIs.

• Sometimes, customers key-in the wrong account number and

their money is transferred to an unintended account. If customers

type out an invalid account number, the money is credited to

a suspense account. Either way, customers cannot access their

deposits.

in India. Roughly 45% of the remittances are chan-

nelled through China Post, while 25% are handled

by the commercial banks.

Cash ins and Cash outs services

Transaction fee from cash ins and cash outs can be

source of revenue for the payment bank. A rough

estimate suggests that India has 100mn migrant

workers. As per NCAER survey, average house-

hold food expenditure of remittent households is

Rs34057 per annum. This translates into annual

cash out of Rs3406bn for these households. The

cash ins and cash outs are chargeable due to infra-

structure and working capital cost. The transaction

charge varies between 2% to 3% depending on

the volume. Thus the domestic migrant worker

cash ins – cash outs market size can be pegged at

Rs3trn, offering a revenue potential of Rs85bn.

Airtime top ups, related recharge services and

utility bill payments

The overall mobile recharge market is about

Rs1,000 bn a year. Around 95% of the recharge

is done at retailer outlets on a cash basis. These

offer opportunities for payment banks by offering

recharge solutions at their access points (mobile,

Internet, or franchise outlet) by aggregating the

recharge facility for multiple telecom service

providers. Similarly, the DTH recharge market is

pegged at Rs74 bn annually. Utility bill payment

facility can also be sources of revenue.


CBS of respective Banks

FI Servers of respective Banks

PTS (server of PPIs or BCs)

V-SAT

Retail access point

The franchise manager of the rural / urban branch will connect to the respective servers through VSAT, and will generate receipt.

G2C Partner Systems

B2C Partner Systems (Mo-bile, DTH Company Server

Once a customer comes to a retail access point (merchant

establishment / corner shop), the merchant manager

initiates the transaction on a laptop, which is connected to

the bank and its partner servers through VSAT/data card.

For example, if a customer came to deposit money in its

account, he/she first needs to authenticate his/her identity

through the thumb impression scanner at the centre.

Once the person is verified, the centre manger will con-

nect its system to the branch server through VSAT/data

card device. He will then transfer the amount from his set-

tlement account (rural manager’s current account) which

he maintains with the bank, to the depositors account.

Once the amount is credited in the customer’s account, a

slip is generated with transaction details. If the transaction

fails, the slip will not be generated. Similarly, if it is a with-

drawal, the centre manager debits the customer account

and credits his settlement account and pays cash to the

customer. The merchant establishment will have to keep

cash to pay for withdrawals. While for banking transaction

it needs to maintain a current account with the bank, for

utility bill payments he maintains an online wallet. All the

utility bill payments are done through this wallet.

How merchant establishment works as a designated access point


Applicant for Payment Bank Bank as JV partner

Reliance Industries ltd State Bank Of India

Airtel M commerce Kotak Mahindra Bank

Oxigen services Ratnakar Bank

Commercial banks partnering for payment bank

P O T E N T I A L M A R K E T S I Z E

Payment bank – enticing interest across industry segment – However motive defers

The concept of the payment bank is

unique and offers an opportunity in

a huge, untapped market for basic

banking services. But the initial journey

is expected to be painful due to intense competi-

tiveness and the limited scope of operations. The

space is expected to be crowded with different

players focusing on the space – not necessarily

with an aim of profitability.

Various banks have partnered with either telecom

service providers or pre-paid instrument issuers for

payment bank licences (banks can only become

an equity partner with maximum equity holding

of 30%). Interest is seen across industries like

telecom service providers (Airtel, Vodafone, Idea,

Reliance Jio); NBFCs (Cholamandalam, Muthoot);

business correspondents (Vakrangee) ; IT ser-

vices (Tech Mahindra), PPIs (Oxygen, Itzcash, GI

Technology), India Post etc. Banks like ICICI bank;

Axis bank and Yes bank are also in discussions with

various applicants for a possible tie up.

Business potential not exciting

The potential market opportunity for payment

bank in remittance and cash in – cash outs can be

pegged at Rs100bn (domestic remittance market

Rs20bn and cash ins – cash outs Rs85bn). The

intermediation business would earn a wafer thin

margin, which can be anything between 50bps

to 100bps based on industry dynamics. The total

opportunity for payment banks does not seem too

exciting. The moot question remains, than why so

many applicant – RBI received 41 application for

payment bank license.

Deep pocket players - profitability not the sole

motive

Despite a not-so-encouraging market potential

for payment banks, interest seems to be immense

from deep pocket players like Reliance, SBI,

Airtel, Vodafone, Idea and Tech Mahindra etc. The

potential opportunity is insignificant for these play-

ers in the overall scheme of things. The primary

motive for telecom operators can be customer

stickiness whereas for PPI issuers and BCs it is a

natural upgrading. PPIs and BCs have been facing

challenges due to restrictions on cash out at points

of sale. Also due to lack of control by sponsor

banks in pricing of services by BCs, the scalability

of the model has been in question. Banks’ motive

in payment bank is to ensure captive customers for

loan products and de-congest branch.

Barring PPIs and BCs, where the upgrading to a

payment bank is driven by commercial motives,

the motive of other participants is to ensure cus-

tomer stickiness or customer acquisition. In such

a scenario, the industry will be impacted by fierce

competition.


C H A L L E N G E S A N D K E Y S U C C E S S F A C T O R S

Little margin of error

The multiplicity of market players. Payment

banks will be competing with different participants

in the financial value chain (like banks, PPIs, BCs,

small banks, RRBs, Cooperative bank etc) for

same set of customer. The regulatory frame work,

corporate objective and goal would differ amongst

various participants. This could create chaos and

fierce competition leading significant pricing

pressure.

Robust risk management process. Dealing with

small ticket multiple transactions would require

robust IT infrastructure. The customer transaction

would largely be biometric enabled which would

require superior infrastructure to process this.

Since the access point would not be owned by the

bank, ensuring quality customer services would

remain a key challenge

Rising customer expectations. Customer expec-

tations are currently being shaped by experiences

outside of the banking industry, where content,

ease of use, interactions and features deliver a

more engaging and rewarding experience. This

means that new services and related technology

would need to work properly once launched, as

any technical issue potentially leading to fraudu-

lent activity or data leakage, could have a sig-

nificant impact on the reputation of the financial

institution.

Device fragmentation and tablet popularity.

Mobile banking platforms will need to continue to

be developed for multiple platforms, supported

by the current and future smart-phone market.

Apart from the established operating systems iOS,

Android, as well as Windows and Blackberry, new

operating systems such as Tizen are emerging.

Depending on their market success, these plat-

forms will also need to be serviced. In addition,

the growing success of tablets means that mobile

app developers will also need to adapt the bank-

ing solutions to the tablet experience of a wider

screen, similar to that of a PC.

Lack of lending activity. Restriction in lending

activity would keep the compress the margin.

Also from customer point of view, absence of loan

product may hinder customer acquisition. Though

payment banks can act as a business correspond-

ent for loan product but this would throw up other

challenges.

Market segmentation and understanding

customer needs. Banking needs of urban areas

would be different from those of rural areas. Ser-

vices such as tailor-made reporting and real-time

information, provided by a client-relationship

manager should help a bank to differentiate itself

from its competitors. Retail banks could primarily

consider the development of solutions to auto-

mate common banking activities such as transfer

payments, transaction histories and automated

notifications related to negative account balances

or security concerns.

Brand protection. Trust and good service are

fundamental brand values of any bank. Payment

banks appointing merchant establishment / corner

shop as cash merchants are not only delegating

the handling of customer transactions to third

parties, but also placing their brand logo in an

environment they don’t directly control. They must

find ways to ensure that trust is never undermined.

In return for the use of the logo and access to

its transactional platforms, banks must insist on

proper contractual terms with cash merchants.

The contract should define the roles and responsi-

Challenges

Key success factors


bilities of both bank and store. The establishment /

shops must be required to maintain confidentiality of

customers’ transactional data, and to post adequate

information so that customers are informed of ser-

vices available, fees, customer complaint procedures

and the like. The bank will need to supervise compli-

ance with contractual terms and monitor the levels

of customer service attained, both through frequent

scheduled visits and mystery shopping programs.

The bank must also put in place information systems

to track reported incidents at cash merchants, and

must be prepared to take prompt action (including

contract termination) when a pattern of misbehav-

iour or abuse emerges. Beyond ensuring the safety

of transactions, managing store branding and agent

processes is essential to maintain a consistent cus-

tomer experience and build trust in the new channel.

Incentivizing the channel of cash merchants. Pay-

ment banks need to incentivize the cash merchant

channel adequately in order to ensure that the stores

maintain a proper level of liquidity at all times, vis-

ually protect the bank’s brand presence within their

store, actively promote the service with the public,

and take the time to train customers unfamiliar with

electronic transactions. If the bank has a transac-

tion-based revenue model, customer transaction

fees can be used to compensate the cash merchant.

Increased foot-traffic and branding advantages from

this new line of business may help the store, but it

will still expect to be directly and sufficiently com-

pensated for the service.

Channel management hierarchy. Payment banks

will need an effective channel to select, sign up,

train, manage and monitor a rapidly expanding net-

work of stores. One approach is to manage the new

merchant channel in a decentralized fashion through

the existing branch management structure. In this

case regional and branch managers’ targets and

reward structures will need to incorporate adequate

performance measures for the new cash merchants.

If the payment bank does not have enough staff at

branch level to be able to take on this additional role

effectively, a second approach is to have the new

cash merchant channel managed by a centralized

team set up in parallel to the branch management

structure. In this case there will need to be an effec-

tive mechanism for capital allocation and business

planning to trade off the capabilities and aspirations

of the competing channels. Alternatively, the man-

agement of the cash merchant channel itself may be

outsourced to one or more third parties. In this case,

the payment bank will need to ensure contractually

sufficient control over the character and growth of

the channel.

Speed of roll-out. Payment banks will have sub-

stantial flexibility in terms of how to sequence the

roll-out of cash merchants, in terms of speed to scale

and geographic coverage strategy. They might start

with a presence in the vicinity of areas with migrant

workers. The experience gained can help them to

spread.

Account opening and product sales. Beyond the

provision of liquidity, cash merchants will likely play

a significant role in facilitating account opening for

prospective bank clients. The new channel will not

result in rapid market expansion if account opening

is onerous and limited. It is important to make ac-

count opening as easy and quick as possible. Going

a step further, thinking through the mechanism for

product cross-selling and up-selling is necessary

from the start, as new product placement is a key

revenue driver. Separating the sales and service

channels is one of the reasons the use of cash mer-

chants is appealing, and it is possible payment banks

may decide cash merchants play no role in product

sales initially, strictly processing deposits and with-

drawals. Nevertheless, payment banks should con-

sider to what extent cash merchants could support

the product sales process, if at all.

Strategic partnership. Strategic cooperation could

be considered for specific projects. For example

banks could join forces to identify a suitable IT

supplier to provide an established mobile banking

platform and share the development costs and

resources necessary for the development of new

solutions.

Ongoing assessment and continuous improve-

ment through customer feedback. Seeking direct

feedback from customers via a mobile banking app

or social media platforms is a crucial source of infor-

mation to assess if expectations are met. Individuals

use them to express their opinion, which should help

banking institutions to continuously improve their

services.


Conclusion

The idea of payment banks was mooted with the sole objective of including small businesses and low income households in formalised banking channels. The previous experience of SCBs, RRB, co-operative banks, and business correspondents has not been very encouraging owing to credit risks and the high cost of service. The objective of the payment bank is to provide basic deposit and payment solutions in a cost effective manner.

The payment bank’s business model would evolve around payment solution. The total market opportunity in remittance and cash ins-cash outs is pegged at Rs100bn. The margin from intermediation business will remain narrow ranging from 50bps to 100bps. Given the number of interested appli-cant, the sheer size of market opportunity does not seem to be very exciting. The objective differs amongst various applicant of payment bank license. The telco’s and bank’s objective will be customer stickiness or customer acquisition and branch de-congestion whereas it will be a natural upgra-dation for pre-paid payment instrument (PPIs) and business correspondent (BCs). In such a scenario, the industry will be impacted by fierce competition.

Payment Bank a boon to commercial bank

Focus on developing business in new locations. Signing up merchant establishment is a low-investment, low-risk way to test the waters in new geographic markets. Payment bank can act as business correspondent of commercial banks for loan product but is not allowed to carry lending operation on its own. This would provide commercial bank access to potential customer segment for loan product.

De-congest Branches. Crowded banking halls and long queues are a common part of customers’ experience in India. Commercial banks can offer a better service to their existing customers by allowing them to conduct basic transactions at a range of merchant establishments / corner shops. In this fashion, commercial banks can offer more choice and con-venience to their customers; they can make their branches more appealing for higher-end customers with more sophis-ticated needs; and they can reduce the average per-trans-action cost by shifting low-value transactions (including over-the-counter bill-pay transactions of non-customers) to a cheaper, variable cost channel. Today commercial banks see transactions largely as a cost and operational burden, while most corner stores / merchant establishments would like more transactions to increase foot traffic. It’s a win-win for

corner stores / merchant establishment, commercial banks and their customers. Increased rural outreach by payment banks can provide a platform to commercial banks to shift its low value high volume transaction and focus on core activity. Cost per transaction through alternate channel is 30%-40% of cost per transaction through brick and mortar branch. The cost to asset ratio of payment banks is expected to be 0.6%-0.8% compared to ~2% for public sector bank like State bank of India. State bank of India has highest operating cost amongst public sector bank owing to its wide presence in unbanked area. De-congested branches will improve effi-ciency and aid the public sector giant to cut operating costs. If State Bank of India can shift even 30% of its transaction to alternate channel like payment bank, it can reduce its overall cost by huge margin. Rough estimates suggest that cost to asset ratio of public sector giant like State Bank of India, can decline by 35bps to 40bps aiding to its return ratio.

Payment bank saving deposit offering will not impact ex-isting interest rate in saving deposit. A competitive depos-it product is a pre-requisite for customer acquisition, which is a key for a stable remittance business. The deposit product offered by payment banks is expected to provide interest rate higher than the prevailing market rate in saving deposit. Depending upon individual entity’s competitive intensity and objective, the interest rate which is likely to be offered by payment banks on its saving product can be anywhere between 5% to 6%. This will not distort the market pricing of saving deposit product as payment bank will not be able to command significant market share due to late entrant in the deposit acquisition space and operational challenges.

Pose risk to micro finance institute

The outreach to small businesses and low income household by payment bank will provide an access to commercial banks to market micro credit product. The low cost of transac-tion, proximity to customer will address the larger issue of reaching out these customer segments. Payment bank can act as collecting agents for commercial bank which will bring down the cost of operations. The loan origination can still be done by commercial bank in order to reduce credit risk. As commercial banks enjoys advantage in terms of funding cost, micro finance institutes cannot compete in terms of pricing.

The government’s thrust to include the small businesses and low income household to formal channel will create competi-tion for micro finance model. Major reason why MFIs are de-siring to enter the mainstream banking channel. Bandhan has secured universal licence and SKS Micro intends to apply for small banking license. Securing a small bank licence will be

crucial to SKS Microfinance’s long-term business prospects.


BY VIBHOR SINGHAL

Dr. Ganesh Natarajan a Vice Chairman and CEO, Zensar Technologies

Dr. Ganesh Natarajan is Vice Chairman & CEO of Zensar Technologies. He was the Chairman of NASSCOM in 2008-09. He is also a Founder and Board Member of Global Talent Track, a pioneer in Employability Skills Training in Asia. Ganesh’s industry responsibilities include leadership of the HBS Club of India, Chairman of the National Committee on Knowledge Management and Business Transformation and the Western Region Committee on Skills for the Confederation of In-dian Industry. He is a member of the Chairmen’s Council of NASSCOM. He is also a fellow of the Computer Society of India. Ganesh is a Director of Social Venture Partners India and Convener of SVP Pune. He has been appointed the Chairman of NASSCOM Foundation for 2014-16.

NASSCOM estimates are out. The industry expects

growth to accelerate compared to last year. What do you

think about them.

NASSCOM estimates 12-14% dollar revenue growth for the

sector. I’m confident about the acceleration in growth for the

industry due to improvement in demand scenario in US. Re-

tail sales for this quarter has improved and employment data

hints of lower unemployment which should translates into

higher confidence for companies to invest. We are witnessing

strong deal pipeline and shorter decision making cycles.

How does NASSCOM arrive at its estimates, and what

are the chances of it being close/far from the actual

numbers?

NASSCOM estimates are based on survey of industry partic-

ipants ranging from Indian IT company, MNCs and captives.

There is fair amount of data that is available for the publicly

listed companies. NASSCOM also polls companies regarding

their growth estimates for the next year. Left are GIC (Global

In-house Centres) which might not reveal that data but there

you also get some idea using their hiring numbers.


sourcing has three important stakeholders – CIO: decision

maker for Run the Business (RTB), Functional Head and

CTO: Change the business (CTB) especially SMAC strategies

and Chief Digital Officer (CDO) for digital transformation of

legacy systems. Vendors are actively trying to explore all the

three avenues to increase share of wallet.

SMAC is the new buzz word in the industry. How can it

cannibalise IMS?

Cannibalisation of IMS due to cloud isn’t big. It has impacted

data centre project marginally. However even large organisa-

tion are yet to completely configure their digital IT strategies.

Helping them to migrate to cloud can easily mitigate large

part of the cannibalisation impact.

Do MNC have competitive advantage in SMAC and what

is the competitive positioning among Indian IT company.

Well in consulting MNC do have a managerial advantage

however Indian It companies strategy have to dual in nature.

Agile for development of SMAC related projects and inte-

grate with the old legacy systems and as well as help them

move to cloud. The client’s comfort across incumbent is more

important as deliver capabilities across companies remain

same. Having said that, the MNCs do have better board

room access, and are able to influence decisions more – but

Indian companies are not far in terms of delivery capabilities.

Which other regions apart from US and Europe, do you

see outsourcing opportunity opening up, for Indian IT

companies?

Africa as a continent offers tremendous opportunity – Zensar

is doing really well in South Africa and Kenya. Verticals like

BFSI and retail, and mining (esp in South Africa) offer huge

growth potential. Apart from that, Australia too appears to

be attractive destination.

Talk us through what strategy Zensar is adopting, in or-

der to gain market-share in various verticals and geogra-

phies?

Zensar has partnered with BCG in the digital transformation

practice, where BCG will general management and functional

advisory part, and Zensar will be responsible for the tech-

nology part. Today Zensar operates in a 3x3x3 cube: Geog-

raphies of US, UK and Africa; Service lines of Application ,

Infrastructure and E-commerce; and verticals of Manufactur-

ing, Retail and Insurance. So almost 95% of Zensar’s reve-

nues come from within this cube and that is what we remain

focussed on.

How is the overall demand environment looking, esp in

US, and also Europe, which is now being touted as the

next big outsourcing destination?

Demand is good for companies with good business models.

Domains like SMAC are offering tremendous opportunities

and so companies with presence in those fields will benefit

from the demand environment – irrespective of the geo-

graphical presence.

Which pockets in US are witnessing strong growth and

why does Europe not form integral part of your confi-

dence.

US growth is stronger than Europe as economic revival in US

is faster. Also the markets are more open to outsourcing than

Europe. Insurance and Banking are showing signs of revival

with increase in discretionary spends towards digital and

stable budget for run the budget business. Manufacturing

firms are investing in improving data collection from external

sources as well as shop floors to increase efficiency and thus

the throughput. Retail is investing in upgrading the supply

chain of brick and mortar store as well as integrating it to

online through click and collect model. Retail companies are

also investing in creating e-commerce presence. Europe on

the other hand is suffering from slower growth and also have

varied cultural outlook across every country having different

perspective to outsourcing.

So what, according to you, are the challenges for the

Indian companies as they try to penetrate European

conglomerates?

The economic reality of European countries is quite different

and you can’t paint the whole region with same brush. So

unlike US, which one large homogeneous market, penetrat-

ing Europe is more difficult where the language and culture

changes in every 30 min flight. UK and Switzerland are fairly

mature markets, and have traditionally been awarding large

outsourcing contracts. Germany, Netherland and France have

large organisations that have already outsourced and few

other large organisations are ready to outsourcing in retail

and manufacturing industries. Spain, if you see, is trying to

portray itself as outsourcing destination rather than outsourc-

ing country. So pretty diverse region in terms of outsourcing

potential, and hence it will have to be tackled accordingly.

How has outsourcing changed over the last few years

and how do you see it transforming over the next few?

Outsourcing has undergone radical changes. Adaptive

outsourcing is replacing pure play advisors. Adaptive out-


Indian Economy – Trend Indicators

Monthly Economic Indicators

Quarterly Economic Indicators

Growth Rates (%) Jan-14 Feb-14 Mar-14 Apr-14 May-14 Jun-14 Jul-14 Aug-14 Sep-14 Oct-14 Nov-14 Dec-14 Jan-15 Feb-15

IIP 1.1 -2.0 -0.5 3.7 5.6 4.3 0.9 0.5 2.6 -2.7 3.9 3.2 2.6 4.7

PMI 51.4 52.5 51.3 51.3 51.4 51.5 53.0 52.4 51.0 51.6 53.3 54.5 52.9 51.2

Core sector 3.7 6.1 2.5 4.3 2.3 7.2 2.6 5.8 1.9 6.3 6.7 2.4 1.8 1.4

WPI 5.1 5.0 6.0 5.5 6.2 5.7 5.4 3.9 2.4 1.7 -0.2 -0.5 -0.4 -2.1

CPI 9.9 8.8 8.0 8.3 8.6 8.3 7.5 8.0 7.7 6.5 5.5 4.4 5.0 5.2

Money Supply 14.5 14.5 13.5 13.9 13.2 12.2 12.7 13.0 12.7 12.0 11.4 10.2 11.5 11.4

Deposit 15.7 15.9 14.6 15.1 13.8 12.2 12.7 13.2 13.0 12.4 12.2 10.6 11.9 11.8

Credit 14.7 14.4 14.3 14.1 12.8 13.1 13.1 10.6 9.4 10.8 10.7 10.6 10.4 10.1

Exports 4.3 -4.9 -3.2 5.3 12.4 10.2 7.3 2.4 2.7 -5.0 7.3 -3.8 -11.2 -15.0

Imports -18.8 -17.5 -2.1 -15.0 -11.4 8.3 4.3 2.1 26.0 3.6 26.8 -4.8 -11.4 -15.7

Trade deficit (USD Bn) -9.5 -8.3 -10.5 -10.1 -11.2 -11.8 -12.2 -10.8 -14.2 -13.4 -16.9 -9.4 -8.3 -6.8

Net FDI (USD Bn) -0.6 -0.1 2.1 2.0 4.8 2.4 3.6 2.5 2.9 2.8 1.8 4.0 5.5 0.0

FII (USD Bn) 2.6 1.5 5.4 -0.1 7.7 4.8 5.4 2.1 2.4 1.7 4.8 -0.4 6.6 0.0

ECB (USD Bn) 1.8 4.3 3.6 3.2 1.5 1.9 3.7 0.5 3.2 2.8 3.5 0.6 2.6 0.0

NRI Deposits (USD Bn) 62.1 62.2 61.0 60.4 59.3 60.2 60.1 60.9 61.8 61.4 62.0 63.0 61.9 61.8

Dollar-Rupee 292.2 294.4 303.7 309.9 312.4 315.8 320.6 318.6 314.2 315.9 316.3 319.7 327.9 338.1

FOREX Reserves (USD Bn) 295.8 291.9 293.4 296.4 287.9 284.6 280.2 275.5 276.3 283.0 291.3 295.7 292.2 294.4

Balance of Payment (USD Bn) Q2FY13 Q3FY13 Q4FY13 Q1FY14 Q2FY14 Q3FY14 Q4FY14 Q1FY15 Q2FY15Exports 72.6 74.2 84.8 73.9 81.2 79.8 83.7 81.7 85.3Imports 120.4 132.6 130.4 124.4 114.5 112.9 114.3 116.4 123.8Trade deficit (47.8) (58.4) (45.6) (50.5) (33.3) (33.2) (30.7) -34.6 -38.6Net Invisibles 26.7 26.6 27.5 28.7 28.1 29.1 29.3 26.8 28.5CAD (21.1) (31.8) (18.2) (21.8) (5.2) (4.1) (1.3) -7.9 -10.1CAD (% of GDP) 5.1 6.5 3.5 4.9 1.2 0.8 0.3 1.7 2.1Capital Account 20.7 31.5 20.5 20.6 (4.8) 23.8 9.2 19.8 18.7BoP (0.2) 0.8 2.7 (0.3) (10.4) 19.1 7.1 11.2 6.9

GDP and its Components (YoY, %) Q2FY13 Q3FY13 Q4FY13 Q1FY14 Q2FY14 Q3FY14 Q4FY14 Q1FY15 Q2FY15Agriculture & allied activities 1.8 0.8 1.6 4.0 5.0 3.7 6.3 3.8 3.2 Industry 0.1 2.0 2.0 (0.9) 1.8 (0.9) (0.5) 4.0 1.2 Mining & Quarrying (0.1) (2.0) (4.8) (3.9) - (1.2) (0.4) 2.1 1.9 Manufacturing (0.0) 2.5 3.0 (1.2) 1.3 (1.5) (1.4) 3.5 0.1 Electricity, Gas & Water Supply 1.3 2.6 0.9 3.8 7.8 5.0 7.2 10.2 8.7 Services 6.5 6.1 5.8 6.5 6.1 6.4 5.8 6.6 6.8 Construction (1.9) 1.0 2.4 1.1 4.4 0.6 0.7 4.8 4.6 Trade, Hotel, Transport and Communications 5.6 5.9 4.8 1.6 3.6 2.9 3.9 2.8 3.8 Finance, Insurance, Real Estate & Business Services 10.6 10.2 11.2 12.9 12.1 14.1 12.4 10.4 9.5 Community, Social & Personal Services 7.4 4.0 2.8 10.6 3.6 5.7 3.3 9.1 9.6 GDP at FC 4.6 4.4 4.4 4.7 5.2 4.6 4.6 5.7 5.3


Annual Economic Indicators and Forecasts Indicators Units FY6 FY7 FY8 FY9 FY10 FY11 FY12 FY13 FY14E FY15E

Real GDP growth % 9.5 9.6 9.3 6.7 8.6 8.9 6.7 4.5 4.7 5.5

Agriculture % 5.1 4.2 5.8 0.1 0.8 8.6 5 1.4 4.7 2.0

Industry % 8.5 12.9 9.2 4.1 10.2 8.3 6.7 0.9 (0.1) 3.0

Services % 11.1 10.1 10.3 9.4 10 9.2 7.1 6.2 6.0 6.9

Real GDP Rs Bn 32,531 35,644 38,966 41,587 45,161 49,185 52,475 54,821 57,418 60,576

Real GDP US$ Bn 733 787 967 908 953 1,079 1,096 1,008 950 993

Nominal GDP Rs Bn 36,925 42,937 49,864 56,301 64,778 77,841 90,097 101,133 113,551 125,424

Nominal GDP US$ Bn 832 948 1,237 1,229 1,367 1,707 1,881 1,859 1,878 2,056

Population Mn 1,106 1,122 1,138 1,154 1,170 1,186 1,202 1,219 1,236 1,254

Per Capita Income US$ 753 845 1,087 1,065 1,168 1,439 1,565 1,525 1,519 1,640

WPI (Average) % 4.5 6.6 4.7 8.1 3.8 9.6 8.7 7.4 6.0 3.0

CPI (Average) % 4.2 6.8 6.4 9 12.4 10.4 8.3 10.2 9.5 6.6

Money Supply % 15.5 20 22.1 20.5 19.2 16.2 15.8 13.6 13.5 12.0

CRR % 5 6 7.5 5 5.75 6 4.75 4.0 4.0 4.0

Repo rate % 6.5 7.5 7.75 5 5 6.75 8.5 7.5 8.0 8.0

Reverse repo rate % 5.5 6 6 3.5 3.5 5.75 7.5 6.5 7.0 7.0

Bank Deposit growth % 24 23.8 22.4 19.9 17.2 15.9 13.5 14.4 14.6 15.0

Bank Credit growth % 37 28.1 22.3 17.5 16.9 21.5 17.0 15.0 14.3 16.0

Centre Fiscal Deficit Rs Bn 1,464 1,426 1,437 3,370 4,140 3,736 5,160 5,209 5,245 5,136

Centre Fiscal Deficit % of GDP 4 3.3 2.9 6 6.4 4.8 5.7 5.2 4.8 4.1

Gross Central Govt Borrowings Rs Bn 1,310 1,460 1,681 2,730 4,510 4,370 5,098 5,580 5,639 5,970

Net Central Govt Borrowings Rs Bn 954 1,104 1,318 2,336 3,984 3,254 4,362 4,674 4,689 4,573

State Fiscal Deficit % of GDP 2.4 1.8 1.5 2.4 2.9 2.1 2.3 2.2 2.2 2.5

Consolidted Fiscal Deficit % of GDP 6.4 5.1 4.4 8.4 9.3 6.9 8.1 7.4 7.0 6.6

Exports US$ Bn 105.2 128.9 166.2 189.0 182.4 251.1 309.8 306.6 318.6 328.2

YoY Growth % 23.4 22.6 28.9 13.7 -3.5 37.6 23.4 -1.0 3.9 3.0

Imports US$ Bn 157.1 190.7 257.6 308.5 300.6 381.1 499.5 502.2 466.2 473.0

YoY Growth % 32.1 21.4 35.1 19.7 -2.5 26.7 31.1 0.5 -7.2 1.5

Trade Balance US$ Bn -51.9 -61.8 -91.5 -119.5 -118.2 -129.9 -189.8 -195.6 -147.6 -144.8

Net Invisibles US$ Bn 42.0 52.2 75.7 91.6 80.0 84.6 111.6 107.5 115.2 113.8

Current Account Deficit US$ Bn -9.9 -9.6 -15.7 -27.9 -38.2 -45.3 -78.2 -88.2 -32.4 -31.1

CAD (% of GDP) % -1.2 -1.0 -1.3 -2.3 -2.8 -2.6 -4.2 -4.7 -1.7 -1.5

Capital Account Balance US$ Bn 25.5 45.2 106.6 7.8 51.6 62.0 67.8 89.3 48.8 59.5

Dollar-Rupee (Average) 44.4 45.3 40.3 45.8 47.4 45.6 47.9 54.4 60.5 60.0

Source: RBI, CSO, CGA, Ministry of Agriculture, Ministry of commerce, Bloomberg, PhillipCapital India Research


Note

: For

ban

ks, E

BITD

A is

pre-

prov

ision

pro

fit

Phill

ipC

apita

l Ind

ia C

over

age

Uni

vers

e: V

alua

tio

n Su

mm

ary

CMP

Mkt

Cap

Ne

t Sal

es (R

s mn)

EB

IDTA

(Rs

mn)

PAT (

Rs m

n)EP

S (R

s)

EPS

Grow

th (%

) P

/E (x

) P

/B (x

) EV

/EBI

TDA

(x)

ROE

(%)

ROCE

(%)

Nam

e of

com

pany

Sect

orRs

Rs m

nFY

15E

FY16

EFY

15E

FY16

EFY

15E

FY16

EFY

15E

FY16

EFY

15E

FY16

EFY

15E

FY16

EFY

15E

FY16

EFY

15E

FY16

EFY

15E

FY16

EFY

15E

FY16

E

Baja

j Aut

oAu

tom

obile

s22

92 6

63,2

15

218

,524

2

45,3

99

44,

029

49,

995

33,

039

38,

022

114.

213

1.4

1.9

15.1

20.1

17.4

6.2

5.4

14.9

13.1

30.8

30.9

31.2

31.9

Bhar

at Fo

rge

Auto

mob

iles

1142

265

,863

6

9,66

5 8

2,89

8 1

5,18

1 1

9,02

8 8

,276

1

0,48

0 35

.545

.012

6.1

26.6

32.1

25.4

8.3

6.6

18.3

14.4

25.8

25.9

19.1

20.8

Hero

Mot

oCor

pAu

tom

obile

s27

52 5

49,6

30

291

,252

3

37,6

06

39,

735

50,

782

27,

120

36,

353

135.

818

2.0

15.5

34.0

20.3

15.1

8.4

6.6

13.8

10.8

41.3

43.7

45.6

49.7

Asho

k Le

ylan

dAu

tom

obile

s64

183

,132

1

20,0

14

141

,303

8

,486

1

2,86

9 9

83

4,7

96

0.3

1.7

-119

.338

7.8

186.

338

.23.

43.

326

.016

.81.

88.

63.

77.

1

Tata

Mot

ors

Auto

mob

iles

559

1,6

69,9

99

2,3

79,2

30

2,8

38,9

55

363

,857

4

97,6

45

139

,188

2

17,2

78

43.2

67.5

-0.5

56.1

12.9

8.3

2.3

1.8

5.5

4.1

17.7

21.7

10.8

13.9

Mah

& M

ahAu

tom

obile

s11

33 7

03,8

22

440

,389

5

14,5

18

57,

702

64,

529

41,

516

46,

709

67.6

76.1

2.3

12.5

16.8

14.9

3.5

2.9

12.3

10.9

20.7

19.7

17.9

17.7

Mah

indr

a CI

EAu

tom

obile

s21

1 6

8,20

5 5

7,23

6 6

5,06

1 5

,600

7

,769

1

,768

3

,501

5.

510

.8-2

198

98.0

38.6

19.5

4.2

3.5

14.9

10.3

11.0

17.8

7.2

11.9

Apol

lo Ty

res

Auto

mob

iles

180

91,

370

137

,896

1

54,5

03

18,

561

20,

858

9,9

73

11,

601

19.8

23.0

4.7

16.3

9.1

7.8

1.7

1.4

5.5

5.0

20.6

19.8

15.9

16.3

Mar

uti S

uzuk

iAu

tom

obile

s34

64 1

,046

,390

5

01,3

06

599

,650

6

2,67

7 8

2,51

8 3

5,73

0 5

1,04

3 11

8.3

169.

028

.442

.929

.320

.54.

43.

816

.511

.915

.018

.314

.618

.1

Bhar

at Fo

rge

Cem

ent

1551

291

,259

1

14,8

03

126

,698

1

2,54

8 1

7,79

3 1

1,61

8 1

1,60

6 61

.861

.86.

1-0

.125

.125

.13.

53.

423

.015

.914

.113

.412

.211

.3

Hero

Mot

oCor

pCe

men

t25

1 3

88,9

86

99,

305

241

,642

1

8,59

1 4

1,86

7 1

4,90

8 2

1,93

4 9.

611

.118

.614

.826

.122

.73.

92.

618

.58.

714

.811

.513

.315

.8

Indi

a Ce

men

tCe

men

t95

29,

182

57,

302

63,

538

7,5

17

9,1

25

754

2

,113

2.

56.

9-2

16.7

180.

338

.713

.80.

80.

87.

65.

82.

05.

64.

05.

9

Man

gala

m C

emen

tCe

men

t28

2 7

,536

1

0,68

9 1

0,96

0 1

,496

1

,899

6

51

991

24

.437

.155

.752

.111

.67.

61.

41.

27.

85.

811

.715

.98.

310

.9

Shre

e Ce

men

tCe

men

t11

036

384

,471

6

6,20

3 8

2,78

7 1

6,43

3 2

5,89

5 6

,519

1

2,98

2 18

7.1

372.

7-1

7.3

99.1

59.0

29.6

7.2

5.8

23.4

14.5

12.1

19.6

11.4

18.9

JK C

emen

tCe

men

t67

9 4

7,48

6 3

7,38

0 4

8,12

0 5

,775

8

,375

1

,245

2

,788

17

.839

.966

.212

3.9

38.1

17.0

2.6

2.3

12.9

8.6

6.8

13.6

6.1

8.8

Dalm

ia B

hara

t Ltd

Cem

ent

461

37,

436

29,

515

41,

090

4,2

63

8,3

20

(182

) 1

,770

-2

.221

.811

6.0

-107

2-2

05.8

21.2

1.2

1.2

20.5

10.3

-0.6

5.5

2.9

5.5

OCL I

ndia

Cem

ent

581

33,

042

22,

057

25,

843

3,5

36

4,8

66

1,3

59

2,3

95

23.9

42.1

26.4

76.3

24.3

13.8

2.6

2.3

10.3

6.8

10.9

16.7

9.1

13.6

JK La

kshm

i Cem

ent

Cem

ent

379

44,

609

23,

148

27,

011

4,0

93

5,2

66

1,8

02

1,9

05

15.3

16.2

60.5

5.7

24.7

23.4

3.1

2.9

14.7

11.9

12.6

12.2

8.1

8.4

Alst

om T&

DCe

men

t78

17,

676

20,

868

19,

012

2,9

17

3,0

72

415

8

62

1.5

3.8

-181

.515

9.7

53.3

20.5

2.0

1.8

9.7

8.8

3.8

9.0

4.2

6.3

Ultra

tech

Cem

ent

Cem

ent

3008

825

,286

2

55,4

18

342

,205

4

3,53

3 7

1,08

5 2

2,52

7 4

0,32

9 82

.114

7.1

2.1

79.0

36.6

20.5

4.3

3.6

20.2

12.8

11.8

17.8

9.3

13.9

ABB

Indi

aCa

p Go

ods

1362

288

,577

7

6,30

7 8

2,55

0 4

,531

7

,261

2

,285

4

,114

10

.819

.420

.380

.112

6.3

70.1

10.3

9.4

64.0

40.0

8.1

13.5

8.3

13.4

BHEL

Cap

Good

s25

5 6

24,6

28

287

,068

2

95,8

06

30,

175

26,

590

22,

689

23,

108

9.3

9.4

-34.

61.

827

.527

.01.

81.

713

.816

.36.

56.

35.

15.

1

Alst

om T&

DCa

p Go

ods

499

127

,857

3

7,98

9 5

0,92

9 3

,785

6

,210

1

,640

3

,458

6.

413

.543

.611

0.9

78.0

37.0

9.6

8.4

34.4

21.0

12.3

22.7

11.9

20.5

Crom

pton

Gre

aves

Cap

Good

s17

0 1

06,2

33

139

,889

1

43,2

38

7,0

52

9,9

09

2,2

76

5,7

66

3.6

9.2

-6.9

153.

446

.718

.42.

82.

515

.611

.16.

013

.85.

09.

6

Engi

neer

s Ind

iaCa

p Go

ods

210

70,

875

16,

684

15,

402

1,5

07

2,4

67

3,0

54

3,6

87

9.1

10.9

-36.

220

.723

.219

.22.

82.

635

.321

.012

.113

.512

.214

.0

Alst

om In

dia

Cap

Good

s69

0 4

6,40

4 2

1,62

6 2

4,56

6 1

,987

1

,919

1

,789

1

,851

26

.627

.512

7.1

3.5

25.9

25.1

4.4

4.0

21.8

22.2

17.1

15.8

18.3

16.8

Lars

en &

Toub

roCa

p Go

ods

1614

1,4

99,3

48

615

,649

7

52,3

68

69,

284

87,

588

49,

006

63,

229

52.6

67.6

-0.5

28.4

30.7

23.9

4.0

3.6

22.2

17.4

13.1

15.0

11.0

12.2

Siem

ens

Cap

Good

s11

71 4

16,9

99

104

,483

1

03,2

69

5,1

46

7,4

70

3,5

51

5,1

13

10.0

14.4

-17.

744

.011

7.4

81.5

9.5

9.0

78.9

52.6

8.1

11.0

6.3

8.9

Cum

min

s Ind

iaCa

p Go

ods

898

249

,023

4

3,80

8 5

1,08

0 6

,780

8

,747

7

,458

8

,854

26

.931

.924

.318

.733

.428

.18.

67.

536

.328

.125

.726

.823

.024

.5

Alst

om In

dia

Cap

Good

s15

01 4

0,63

2 2

4,88

3 2

7,70

5 2

,151

2

,682

1

,272

1

,626

47

.861

.1-1

.227

.831

.424

.64.

23.

717

.513

.913

.515

.211

.813

.3

Ther

max

Cap

Good

s10

91 1

30,0

29

54,

550

57,

479

4,4

75

5,2

32

2,3

66

2,9

15

19.9

24.5

-7.0

23.2

55.0

44.6

6.1

5.6

29.7

25.1

11.0

12.5

8.7

9.8

Volta

sCa

p Go

ods

264

87,

387

472

,943

5

22,1

43

108

,469

1

17,8

71

86,

469

97,

857

35.1

39.6

10.7

13.1

7.5

6.7

1.6

1.4

0.3

0.1

21.3

20.8

21.8

21.2

Cham

bal F

ertil

iser

sAg

ri In

puts

62 2

5,86

5 9

0,39

1 1

04,0

67

7,2

90

8,7

53

2,7

45

3,6

71

6.6

8.9

22.0

33.7

9.4

7.0

1.2

1.0

8.3

6.8

12.3

14.9

5.4

6.5

Coro

man

del F

ert.

Agri

Inpu

ts27

3 7

9,49

4 1

04,0

14

113

,491

8

,690

1

1,46

4 4

,064

6

,091

14

.020

.910

.949

.919

.613

.03.

02.

611

.18.

015

.319

.817

.120

.7

KEC

Inte

rnat

iona

lCa

p Go

ods

85 2

1,80

1 8

3,26

3 8

5,62

3 4

,874

6

,256

6

52

1,5

73

2.5

6.1

-23.

314

1.4

33.5

13.9

1.6

1.5

8.6

6.6

4.9

10.8

7.3

9.1

Tata

Che

mica

ls Lt

dAg

ri In

puts

471

119

,876

1

78,5

15

185

,584

2

2,05

9 2

3,67

3 7

,523

8

,444

29

.533

.192

.212

.215

.914

.21.

91.

88.

06.

912

.112

.47.

68.

2


Note

: For

ban

ks, E

BITD

A is

pre-

prov

ision

pro

fit

Phill

ipC

apita

l Ind

ia C

over

age

Uni

vers

e: V

alua

tio

n Su

mm

ary

CMP

Mkt

Cap

Ne

t Sal

es (R

s mn)

EB

IDTA

(Rs

mn)

PAT (

Rs m

n)EP

S (R

s)

EPS

Grow

th (%

) P

/E (x

) P

/B (x

) EV

/EBI

TDA

(x)

ROE

(%)

ROCE

(%)

Nam

e of

com

pany

Sect

orRs

Rs m

nFY

15E

FY16

EFY

15E

FY16

EFY

15E

FY16

EFY

15E

FY16

EFY

15E

FY16

EFY

15E

FY16

EFY

15E

FY16

EFY

15E

FY16

EFY

15E

FY16

EFY

15E

FY16

E

Kave

ri Se

eds

Agri

Inpu

ts86

0 5

9,24

0 1

2,39

8 1

4,47

2 3

,079

3

,765

3

,026

3

,775

44

.255

.145

.124

.819

.515

.67.

75.

518

.814

.839

.735

.545

.640

.2

PI In

dust

ries

Agri

Inpu

ts49

8 6

8,06

3 1

8,31

7 2

1,88

4 3

,511

4

,191

2

,452

2

,924

18

.021

.530

.219

.227

.723

.27.

66.

019

.215

.827

.625

.826

.625

.8

Ralli

s Ind

iaAg

ri In

puts

231

44,

845

19,

074

22,

226

2,8

44

3,4

68

1,6

06

1,9

43

8.3

10.0

5.8

21.0

27.9

23.1

5.4

4.6

15.9

12.7

19.2

20.1

19.0

20.5

Unite

d Ph

osph

orus

Agri

Inpu

ts43

6 1

86,7

00

120

,533

1

33,0

58

23,

263

25,

008

11,

436

13,

401

26.7

31.3

12.7

17.2

16.3

13.9

3.1

2.8

8.8

8.1

19.8

20.5

16.9

16.7

Zuar

i Agr

oche

mica

lsAg

ri In

puts

238

10,

006

53,

769

57,

372

2,5

78

3,4

16

155

1

,016

3.

724

.1-1

27.8

554.

264

.59.

91.

21.

113

.59.

31.

911

.41.

710

.2

Deep

ak Fe

rtilis

ers

Agri

Inpu

ts13

1 1

1,59

0 3

2,74

4 3

3,99

5 4

,882

5

,176

2

,309

2

,610

26

.229

.6-8

.313

.05.

04.

40.

70.

63.

53.

115

.015

.210

.911

.6

Andh

ra B

ank

Finan

cials

238

10,

006

40,

758

48,

149

40,

758

48,

149

7,1

73

12,

330

12.2

19.6

64.7

61.0

19.6

12.1

1.6

1.5

8.1

12.8

0.4

10.2

Bank

of B

arod

a Fin

ancia

ls13

1 1

1,59

0 1

42,3

28

165

,825

1

42,3

28

165

,825

5

5,49

8 6

3,24

1 12

8.9

146.

822

.214

.01.

00.

90.

10.

115

.015

.20.

811

.6

Bank

of I

ndia

Fin

ancia

ls87

51,

031

115

,131

1

31,7

77

115

,131

1

31,7

77

25,

201

31,

526

39.2

49.0

-7.7

25.1

2.2

1.8

0.2

0.2

9.3

10.9

0.4

0.6

Cana

ra B

ank

Finan

cials

404

186

,441

1

08,9

73

125

,350

1

08,9

73

125

,350

3

5,54

1 4

4,36

3 77

.196

.245

.824

.85.

24.

20.

70.

613

.515

.50.

70.

7

Corp

orat

ion

bank

Finan

cials

242

155

,171

4

0,38

1 4

6,37

3 4

0,38

1 4

6,37

3 6

,998

1

0,77

6 41

.864

.324

.654

.05.

83.

80.

40.

46.

810

.00.

30.

5

HDFC

Ban

kFin

ancia

ls40

4 1

86,4

41

223

,085

2

74,3

92

223

,085

2

74,3

92

105

,584

1

30,4

51

220.

125

8.9

21.4

17.7

1.8

1.6

0.4

0.3

22.2

21.2

2.0

0.7

ICIC

I Ban

kFin

ancia

ls33

5 1

,938

,911

1

90,0

33

212

,598

1

90,0

33

212

,598

1

12,1

91

118

,124

96

.910

1.9

14.1

5.1

3.5

3.3

0.5

0.4

14.6

14.0

1.8

IOB

Finan

cials

1059

2,5

60,2

80

64,

783

73,

446

64,

783

73,

446

6,9

07

11,

896

4.9

8.5

-4.1

72.2

215.

312

5.0

9.4

8.3

4.6

7.1

0.2

2.0

Orie

ntal

Ban

k Fin

ancia

ls33

5 1

,938

,911

1

42,3

28

165

,825

1

42,3

28

165

,825

5

5,49

8 6

3,24

1 12

8.9

146.

822

.214

.02.

62.

30.

40.

315

.015

.20.

81.

7

PNB

Finan

cials

49 6

0,34

7 1

85,0

43

215

,209

1

85,0

43

215

,209

4

2,81

8 5

7,30

8 11

8.3

158.

328

.133

.80.

40.

30.

00.

011

.814

.10.

70.

3

SBI

Finan

cials

242

72,

428

758

,227

8

65,8

40

758

,227

8

65,8

40

175

,369

2

20,2

25

234.

828

4.2

21.0

21.0

1.0

0.9

0.1

0.1

11.0

12.2

0.7

0.8

Unio

n Ba

nk

Finan

cials

169

306

,402

8

4,68

6 9

6,32

1 8

4,68

6 9

6,32

1 1

9,27

2 2

5,58

4 28

.137

.34.

432

.86.

04.

50.

60.

510

.512

.30.

50.

8

Indi

an B

ank

Finan

cials

180

114

,249

5

1,42

5 6

1,51

3 5

1,42

5 6

1,51

3 1

3,20

9 1

6,78

9 28

.436

.114

.027

.16.

35.

00.

70.

611

.012

.80.

70.

6

Deve

lopm

ent C

redi

tFin

ancia

ls18

2 8

4,69

5 5

,033

6

,041

5

,033

6

,041

1

,728

1

,820

6.

26.

51.

75.

329

.628

.13.

43.

013

.211

.21.

20.

7

AXIS

Ban

kFin

ancia

ls11

4 3

2,12

6 1

41,6

72

165

,387

1

41,6

72

165

,387

7

3,03

3 8

4,92

2 30

.935

.816

.915

.73.

73.

20.

60.

517

.717

.61.

81.

0

Indu

sind

Ban

kFin

ancia

ls85

5 4

52,4

65

34,

512

42,

646

34,

512

42,

646

17,

511

22,

152

33.3

38.5

24.4

15.5

25.7

22.2

4.4

3.1

18.6

16.9

1.8

Shrir

am Tr

ansp

ort F

inFin

ancia

ls85

5 4

52,4

65

41,

418

48,

540

32,

264

37,

845

13,

900

16,

900

61.3

74.5

10.0

21.6

13.9

11.5

2.1

1.8

15.7

16.6

2.7

1.9

LIC

Hous

ing

Fina

nce

Finan

cials

1247

1,9

61,4

18

22,

074

26,

824

21,

216

25,

655

13,

904

16,

734

27.5

33.1

5.6

20.4

45.3

37.6

7.3

6.2

17.1

17.8

1.4

1.7

SKS

Micr

o Fi

nanc

eFin

ancia

ls42

4 5

3,39

9 4

,249

5

,994

2

,093

3

,293

2

,073

2

,573

16

.420

.415

3.8

24.2

25.7

20.7

5.1

4.2

27.2

21.6

6.7

5993

Hind

usta

n Un

ileve

rFM

CG90

1 1

,949

,829

3

06,8

24

342

,266

5

9,49

6 7

3,40

3 3

9,89

7 4

9,58

2 18

.522

.97.

924

.348

.839

.339

.926

.632

.325

.881

.867

.798

.481

.7

Mar

ico In

dust

ries

FMCG

354

228

,517

5

7,98

7 6

5,51

9 8

,925

1

1,26

5 5

,811

7

,391

9.

011

.519

.427

.239

.330

.912

.19.

525

.519

.830

.930

.724

.425

.5

Jubi

lant

Food

wor

ksFM

CG15

47 1

01,3

90

20,

621

27,

052

2,6

34

3,5

69

1,2

50

1,6

82

19.1

25.7

-0.9

34.6

81.0

60.2

14.7

11.8

38.2

28.1

18.2

19.7

18.5

20.5

Godr

ej C

onsu

mer

FMCG

1116

380

,020

8

3,31

7 9

5,14

8 1

2,60

4 1

4,22

5 8

,268

9

,219

24

.327

.15.

011

.545

.941

.28.

77.

731

.227

.419

.018

.615

.716

.8

ITC

FMCG

371

2,9

70,7

62

359

,851

3

94,2

65

133

,284

1

43,7

34

95,

074

97,

245

11.9

12.2

7.2

2.3

31.2

30.5

9.8

8.6

21.8

20.1

31.3

28.2

26.5

24.3

Nest

leFM

CG68

98 6

65,0

76

98,

063

109

,515

2

0,61

2 2

3,26

8 1

2,00

2 1

3,37

6 12

4.5

138.

78.

811

.455

.449

.723

.520

.832

.027

.942

.541

.735

.942

.9

Colg

ate

FMCG

1851

251

,702

3

9,82

4 4

5,30

5 8

,126

1

0,35

3 5

,560

7

,051

40

.951

.815

.826

.845

.335

.738

.534

.030

.724

.085

.195

.385

.198

.3

Glax

o Sm

ithkl

ine

FMCG

5686

239

,136

4

0,59

6 4

5,36

5 5

,646

6

,359

5

,955

6

,558

14

1.6

155.

9-2

0.6

10.1

40.2

36.5

11.3

10.1

38.2

34.1

28.0

27.8

28.4

28.8

Agro

Tech

Food

sFM

CG67

6 1

6,47

4 7

,725

8

,004

5

49

485

3

57

249

14

.710

.2-1

6.7

-30.

246

.166

.15.

35.

429

.933

.411

.48.

111

.67.

9

Asia

n Pa

ints

FMCG

841

806

,877

1

42,7

86

165

,575

2

4,29

7 3

2,43

4 1

5,59

4 2

0,42

3 16

.321

.327

.031

.051

.739

.516

.113

.433

.024

.131

.233

.832

.635

.8

Emam

iFM

CG99

8 2

26,5

14

21,

838

25,

573

5,1

04

6,6

50

4,4

27

5,7

92

19.5

25.5

7.8

30.8

51.2

39.1

18.3

14.2

43.5

32.9

35.7

36.4

36.0

37.5


Note

: For

ban

ks, E

BITD

A is

pre-

prov

ision

pro

fit

Phill

ipC

apita

l Ind

ia C

over

age

Uni

vers

e: V

alua

tio

n Su

mm

ary

CMP

Mkt

Cap

Ne

t Sal

es (R

s mn)

EB

IDTA

(Rs

mn)

PAT (

Rs m

n)EP

S (R

s)

EPS

Grow

th (%

) P

/E (x

) P

/B (x

) EV

/EBI

TDA

(x)

ROE

(%)

ROCE

(%)

Nam

e of

com

pany

Sect

orRs

Rs m

nFY

15E

FY16

EFY

15E

FY16

EFY

15E

FY16

EFY

15E

FY16

EFY

15E

FY16

EFY

15E

FY16

EFY

15E

FY16

EFY

15E

FY16

EFY

15E

FY16

EFY

15E

FY16

E

Brita

nnia

FMCG

1934

231

,925

7

7,62

2 8

8,91

3 7

,638

9

,227

5

,108

6

,704

42

.656

.028

.931

.245

.434

.619

.714

.829

.624

.243

.442

.850

.237

.9

Baja

j Cor

pFM

CG47

4 6

9,87

8 8

,016

9

,360

2

,244

2

,875

2

,180

2

,732

14

.818

.523

.325

.332

.125

.612

.811

.630

.223

.440

.045

.532

.139

.5

Apco

tex

Indu

strie

sFM

CG15

9,7

02

4,1

22

5,3

33

463

7

07

288

4

67

27.5

44.7

118.

862

.30.

50.

30.

10.

11,

029

674.

818

.823

.222

.124

.8

Dabu

rFM

CG27

2 4

77,6

83

79,

258

89,

813

13,

729

17,

456

11,

024

13,

570

6.3

7.8

22.0

23.1

43.0

34.9

13.8

11.2

34.7

26.9

32.0

32.0

26.2

27.5

NCC

Infra

struc

ture

76 4

2,25

1 7

8,90

0 9

0,73

1 6

,075

7

,712

7

46

2,9

43

1.3

5.3

-15.

129

4.7

56.7

14.4

1.3

1.2

10.5

8.3

2.3

8.4

8.5

9.9

Asho

ka B

uild

con

Infra

struc

ture

143

22,

648

20,

526

29,

228

4,7

66

7,7

30

541

1

,272

3.

48.

1-5

0.1

135.

141

.717

.71.

81.

614

.09.

34.

29.

22.

56.

0

GMR

Infra

stru

ctur

eIn

frastr

uctu

re18

78,

502

96,

015

82,

008

29,

120

25,

769

(19,

130)

(15,

716)

-4.4

-3.6

48.3

-17.

8-4

.1-5

.00.

91.

216

.517

.8-2

3.1

-23.

40.

00.

0

GVK

Pow

erIn

frastr

uctu

re10

15,

555

20,

022

26,

962

9,5

38

17,

950

(5,9

68)

(8,0

94)

-3.8

-5.1

61.9

35.6

-2.6

-1.9

0.8

1.1

26.2

13.4

-29.

4-5

5.7

-1.1

0.7

IRB

Infra

stru

ctur

eIn

frastr

uctu

re26

3 8

7,41

2 3

9,10

6 5

2,44

1 2

2,52

0 2

8,80

3 5

,768

5

,237

17

.415

.825

.6-9

.215

.216

.72.

11.

79.

17.

713

.810

.44.

53.

5

KNR

Cons

truct

ion

Infra

struc

ture

383

10,

761

8,7

65

10,

080

1,3

32

1,5

42

646

8

24

23.0

29.3

5.9

27.5

16.7

13.1

1.9

1.6

8.2

6.7

11.9

13.4

11.7

13.1

Tech

Mah

indr

aIn

frastr

uctu

re55

6 1

7,92

1 1

4,71

6 1

8,39

5 2

,796

3

,403

1

,149

1

,495

35

.746

.417

.930

.115

.612

.02.

21.

97.

56.

416

.617

.113

.113

.8

Adan

i Por

ts &

SEZ

Infra

struc

ture

326

674

,630

4

0,77

5 5

3,12

8 2

8,83

3 3

7,73

5 2

2,77

1 2

8,00

9 11

.013

.51.

123

.029

.624

.15.

94.

825

.318

.920

.120

.113

.914

.8

HCL T

echn

olog

ies

IT Se

rvice

s19

56 1

,373

,686

3

29,1

80

374

,283

8

6,66

0 9

3,10

8 6

3,70

0 7

5,67

2 90

.110

7.2

58.4

18.9

21.7

18.2

6.9

5.6

16.0

14.8

31.7

30.6

32.8

31.1

Info

sys

IT Se

rvice

s22

87 2

,626

,786

5

40,8

38

614

,565

1

48,8

38

166

,926

1

19,3

65

133

,755

10

4.4

117.

012

.112

.121

.919

.54.

74.

115

.313

.421

.421

.023

.122

.3

TCS

IT Se

rvice

s24

60 4

,818

,765

9

59,4

20

1,1

28,0

32

275

,950

3

21,5

37

215

,768

2

59,8

01

110.

213

2.6

12.9

20.4

22.3

18.5

8.7

7.0

17.4

14.9

39.1

37.6

37.6

40.0

Pers

iste

nt S

yste

ms

IT Se

rvice

s16

67 6

6,66

4 1

9,05

7 2

1,95

7 4

,076

4

,845

2

,918

3

,382

72

.984

.617

.015

.922

.819

.74.

74.

016

.013

.320

.520

.119

.920

.2

KPIT

Tech

nolo

gies

IT Se

rvice

s21

0 4

1,15

7 3

0,38

9 3

5,70

2 4

,080

5

,661

2

,548

3

,611

13

.619

.36.

641

.615

.410

.93.

02.

410

.57.

419

.722

.215

.419

.5

Wip

roIT

Serv

ices

640

1,5

79,7

47

472

,943

5

22,1

43

108

,469

1

17,8

71

86,

469

97,

857

35.1

39.6

10.7

13.1

18.3

16.1

3.9

3.4

14.0

12.7

21.3

20.8

21.8

21.2

Tech

Mah

indr

aIT

Serv

ices

2843

682

,318

2

22,4

51

287

,791

4

2,89

7 5

6,03

1 2

7,15

3 3

7,11

3 11

5.2

156.

4-8

.135

.824

.718

.25.

34.

315

.211

.821

.423

.624

.325

.2

NIIT

Tech

nolo

gies

IT Se

rvice

s36

9 2

2,52

6 2

3,80

1 2

5,96

2 3

,383

3

,748

1

,861

2

,169

30

.735

.8-1

9.7

16.5

12.0

10.3

1.5

1.4

6.0

5.2

12.8

13.6

12.7

13.4

Zee

Ente

rtain

men

tM

edia

346

332

,363

4

7,11

8 5

5,23

1 1

2,85

4 1

7,23

9 7

,792

1

0,62

0 8.

111

.1-1

2.8

36.3

42.6

31.3

7.0

6.3

25.4

19.0

16.4

20.3

19.8

22.4

HT M

edia

Med

ia13

6 3

1,56

1 2

3,03

1 2

5,34

0 2

,898

3

,799

1

,993

2

,574

8.

611

.1-3

.529

.115

.812

.31.

61.

411

.18.

210

.011

.310

.312

.2

Sun

TV N

etw

ork

Med

ia43

3 1

70,8

16

24,

296

27,

024

16,

230

18,

625

7,3

89

8,9

45

18.8

22.7

-1.2

21.1

23.1

19.1

5.3

4.7

10.2

8.6

23.0

24.9

22.5

25.4

Jagr

an P

raka

shan

Med

ia13

3 4

3,47

9 1

8,05

4 2

1,77

5 4

,672

5

,782

2

,420

2

,693

7.

88.

73.

211

.317

.115

.43.

32.

99.

18.

119

.418

.816

.115

.5

Hath

way

Cab

leM

edia

64 5

2,90

3 2

2,93

8 2

7,80

4 5

,243

6

,124

7

99

1,2

70

5.2

8.3

-159

.858

.412

.27.

70.

70.

712

.210

.36.

08.

84.

95.

8

Den

Netw

orks

Med

ia10

9 1

9,50

4 1

7,95

0 2

3,57

3 5

,351

6

,203

1

,301

1

,353

8.

99.

247

2.7

4.0

12.3

11.9

0.8

0.8

3.6

2.7

6.8

6.6

8.9

8.6

Dish

TVM

edia

79 8

4,43

5 2

8,88

3 3

2,75

7 8

,311

9

,469

(2

76)

1,8

57

-0.3

1.7

-82.

5-7

72.1

-305

.545

.4-2

4.8

-54.

610

.78.

78.

1-1

20.2

7.6

14.0

Hind

alco

Inds

Met

als

150

309

,437

9

86,3

50

1,1

04,5

17

110

,379

1

36,7

37

30,

210

37,

460

14.6

18.1

17.5

24.0

10.2

8.3

0.7

0.7

8.4

6.7

7.1

8.1

4.4

5.6

NALC

O M

etal

s50

127

,573

7

5,88

7 8

2,17

9 1

3,88

3 1

8,79

1 1

0,87

2 1

4,24

3 4.

25.

557

.231

.011

.79.

01.

00.

95.

33.

88.

510

.47.

99.

7

Hind

usta

n Zi

ncM

etal

s18

3 7

71,3

32

140

,019

1

46,6

25

70,

934

74,

010

76,

870

73,

548

18.2

17.4

10.3

-4.3

10.0

10.5

1.8

1.6

6.6

5.7

17.8

15.2

17.9

15.1

Tata

Ste

elM

etal

s36

5 3

54,5

91

1,4

22,6

10

1,4

47,0

10

139

,794

1

68,8

44

7,3

14

26,

494

7.5

27.3

-79.

826

2.2

48.5

13.4

0.8

0.8

7.8

6.6

1.7

6.1

3.5

4.1

JSW

Ste

elM

etal

s97

8 2

36,4

04

516

,417

5

49,4

73

96,

607

120

,717

2

1,56

1 3

7,06

5 89

.215

3.3

-0.4

71.9

11.0

6.4

1.0

0.9

6.6

4.9

9.4

14.0

7.0

8.9

Jind

al S

teel

& P

ower

Met

als

151

138

,242

2

62,8

21

322

,139

7

9,50

0 8

0,08

6 2

1,82

4 2

1,24

8 23

.923

.214

.2-2

.66.

36.

50.

60.

66.

56.

29.

98.

91.

85.

5

SAIL

Met

als

73 3

02,3

21

474

,643

5

55,9

43

46,

376

78,

006

19,

029

35,

374

4.6

8.6

14.8

85.9

15.9

8.5

0.7

0.7

11.7

7.2

4.4

7.7

3.8

5.7

Sesa

Ste

rlite

Met

als

208

617

,545

7

22,5

86

838

,259

2

47,1

70

268

,146

6

0,41

2 6

7,24

5 20

.422

.7-7

.411

.310

.29.

20.

80.

75.

14.

67.

88.

17.

67.

2


Note

: For

ban

ks, E

BITD

A is

pre-

prov

ision

pro

fit

Phill

ipC

apita

l Ind

ia C

over

age

Uni

vers

e: V

alua

tio

n Su

mm

ary

CMP

Mkt

Cap

Ne

t Sal

es (R

s mn)

EB

IDTA

(Rs

mn)

PAT (

Rs m

n)EP

S (R

s)

EPS

Grow

th (%

) P

/E (x

) P

/B (x

) EV

/EBI

TDA

(x)

ROE

(%)

ROCE

(%)

Nam

e of

com

pany

Sect

orRs

Rs m

nFY

15E

FY16

EFY

15E

FY16

EFY

15E

FY16

EFY

15E

FY16

EFY

15E

FY16

EFY

15E

FY16

EFY

15E

FY16

EFY

15E

FY16

EFY

15E

FY16

EFY

15E

FY16

E

ONGC

Oil &

Gas

346

2,9

56,7

77

1,6

04,8

77

1,5

96,0

11

577

,060

6

43,4

65

226

,581

2

86,2

17

26.5

33.5

-14.

526

.313

.010

.31.

61.

45.

65.

012

.214

.010

.20.

0

Petro

net L

NGOi

l & G

as18

9 1

41,9

38

444

,035

3

56,1

91

16,

633

19,

334

7,3

70

9,3

76

9.8

12.5

3.5

27.2

19.3

15.1

2.6

2.3

10.0

8.5

13.3

15.1

10.2

11.2

Cairn

Indi

aOi

l & G

as25

2 4

72,7

39

161

,395

1

40,0

63

105

,538

7

8,97

2 7

7,83

1 4

9,87

7 41

.526

.6-3

3.3

-35.

96.

19.

50.

80.

74.

25.

712

.77.

810

.57.

3

GAIL

Oil &

Gas

410

519

,759

5

43,2

41

583

,930

5

6,19

7 5

7,59

3 3

5,12

1 3

4,49

1 27

.227

.2-1

4.4

0.0

15.1

15.1

1.8

1.7

10.8

10.4

11.8

11.0

8.2

7.8

Indr

apra

stha

Gas

Oil &

Gas

430

60,

172

38,

394

44,

181

8,5

07

8,9

77

4,5

11

4,8

21

32.2

34.4

25.2

6.9

13.3

12.5

2.9

2.5

7.0

6.3

23.5

21.5

17.4

16.1

Guja

rat S

tate

Pet

Oil &

Gas

120

67,

285

10,

975

12,

100

9,6

79

10,

713

4,6

35

5,2

20

8.2

9.3

10.7

12.6

14.5

12.9

1.8

1.6

7.5

6.5

12.6

12.7

10.3

10.6

Oil I

ndia

Oil &

Gas

530

318

,662

9

7,25

6 1

19,2

37

40,

251

58,

603

26,

848

37,

321

44.7

62.1

-9.9

39.0

11.9

8.5

1.4

1.3

7.5

5.1

12.0

15.2

8.7

11.1

Berg

er P

aint

sFM

CG21

9 1

51,9

68

45,

885

54,

368

5,4

82

6,4

98

3,1

70

3,8

68

9.1

11.2

22.7

22.0

24.0

19.6

5.7

4.7

28.4

23.9

23.7

23.7

20.0

20.8

Kaja

ria C

eram

icsOt

her

795

63,

174

22,

437

27,

529

3,5

23

4,4

87

1,6

92

2,2

14

21.3

27.9

29.6

30.8

37.3

28.5

9.9

7.7

18.7

14.7

26.6

26.9

28.6

30.1

HSIL

Ltd

Othe

r39

5 2

6,11

8 1

9,57

6 2

2,53

4 3

,102

3

,799

7

93

1,2

78

12.0

19.3

133.

461

.232

.920

.42.

42.

211

.18.

97.

410

.93.

76.

1

Have

lls Lt

dOt

her

260

#NAM

E? 5

3,03

0 6

0,24

7 7

,208

8

,509

4

,743

5

,597

7.

69.

0-8

0.2

18.0

34.2

29.0

6.8

6.0

21.7

18.0

19.9

20.5

20.1

20.7

Gree

nply

Indu

strie

sOt

her

920

22,

199

15,

594

17,

579

2,0

58

2,4

08

1,1

23

1,3

40

46.5

55.5

-1.9

19.3

19.8

16.6

5.1

3.9

12.5

10.3

25.7

23.8

12.3

17.2

Phoe

nix

Mill

s Re

al E

state

376

54,

434

17,

219

23,

899

8,3

06

13,

172

1,4

32

4,3

45

9.9

30.0

19.3

203.

538

.012

.52.

52.

510

.46.

37.

819

.67.

913

.3

DLF

Real

Esta

te15

9 2

82,7

92

77,

251

92,

069

32,

051

39,

877

6,6

53

8,4

84

3.9

5.0

-33.

327

.540

.731

.90.

90.

914

.912

.12.

32.

94.

65.

2

Ober

oi R

ealty

Real

Esta

te27

5 9

0,41

2 1

6,52

3 2

4,15

2 9

,676

1

4,43

7 5

,882

9

,160

17

.927

.989

.055

.715

.49.

91.

91.

69.

96.

212

.316

.714

.118

.8

Unite

ch Lt

dRe

al E

state

16 4

2,61

9 3

2,50

5 3

3,59

6 3

,968

4

,432

3

,042

3

,261

1.

21.

233

7.2

7.2

14.0

13.1

0.4

0.4

26.3

23.8

2.6

2.7

1.8

1.9

Futu

re R

etai

lRe

tail

121

48,

457

101

,942

1

16,8

53

10,

908

12,

738

768

2

,704

1.

86.

3-3

4780

251.

967

.519

.21.

00.

98.

06.

31.

54.

94.

65.

8

Shop

pers

Sto

pRe

tail

465

38,

777

42,

690

48,

970

1,8

52

2,5

08

(25)

286

-0

.33.

4-6

6.2

-122

6-1

526

135.

47.

97.

524

.618

.1-0

.55.

52.

25.

2

Raym

ond

Ltd

Reta

il50

9 3

1,22

8 5

4,29

2 6

1,57

2 4

,941

6

,065

1

,222

1

,808

19

.929

.5-1

4.6

48.0

25.6

17.3

2.0

1.8

9.4

7.7

7.7

10.2

7.4

8.5

Bata

Indi

aRe

tail

1293

83,

087

27,

377

25,

676

3,6

69

3,5

95

2,2

29

2,1

49

34.7

33.4

32.9

-3.6

37.3

38.7

8.4

7.3

21.4

21.4

22.6

19.0

23.7

21.2

Tita

n Co

mpa

nyRe

tail

426

378

,197

1

23,7

41

148

,517

1

1,87

9 1

4,70

3 8

,537

1

0,97

7 9.

612

.416

.228

.644

.334

.511

.99.

431

.225

.030

.030

.526

.529

.2

Tren

tRe

tail

1484

49,

307

23,

442

28,

583

1,2

48

2,3

05

665

1

,654

20

.049

.717

3.9

148.

574

.129

.84.

13.

638

.720

.45.

512

.14.

89.

7

Bhar

ti Ai

rtel

Tele

com

356

1,4

24,2

74

931

,708

1

,031

,403

3

18,3

90

356

,095

6

6,95

0 6

7,78

8 16

.716

.914

6.2

1.3

21.3

21.0

2.1

1.8

7.0

6.3

9.9

8.8

7.1

7.0

Relia

nce

Com

mTe

leco

m70

175

,224

2

22,4

37

234

,448

7

7,49

5 8

2,81

0 9

,575

1

4,14

3 4.

66.

9-1

5.8

47.7

15.2

10.3

0.5

0.5

6.9

5.8

3.4

4.8

3.8

4.2

Bhar

ti In

frate

lTe

leco

m36

1 6

83,3

23

72,

069

80,

054

50,

328

59,

491

18,

511

25,

732

9.8

13.6

21.6

39.0

36.9

26.5

3.7

3.5

13.3

11.0

10.1

13.3

8.1

10.2

Idea

Cel

lula

rTe

leco

m15

1 5

43,7

78

314

,451

3

78,5

48

105

,389

1

32,5

41

28,

507

42,

435

7.9

11.8

27.8

48.9

19.1

12.8

1.7

1.5

7.2

5.0

9.0

11.7

6.5

6.4

Tata

Com

mun

icatio

nTe

leco

m39

6 1

12,9

46

204

,237

2

20,7

36

31,

814

35,

330

1,5

60

3,0

03

5.5

10.5

343.

392

.572

.437

.614

.312

.26.

05.

119

.832

.64.

55.

7

Auro

bind

o Ph

arm

aPh

arm

a11

06 3

22,7

85

122

,910

1

39,0

69

26,

794

31,

569

16,

340

19,

561

56.1

67.2

17.4

19.7

19.7

16.5

5.9

4.4

13.3

11.0

30.1

26.9

26.3

26.6

Bioc

onPh

arm

a42

5 8

4,96

0 2

9,83

4 3

4,75

2 6

,629

8

,424

4

,053

5

,068

20

.325

.3-6

.325

.121

.016

.82.

62.

412

.89.

712

.414

.110

.712

.5

Cadi

la H

ealth

care

Phar

ma

1505

308

,126

8

2,78

2 9

4,06

6 1

6,79

7 2

0,32

8 1

0,67

7 1

3,47

2 52

.165

.835

.226

.228

.922

.97.

25.

719

.515

.824

.824

.716

.518

.6

Divi

's La

bora

torie

sPh

arm

a16

38 2

17,3

79

31,

607

37,

359

11,

789

14,

458

8,8

24

10,

684

66.6

80.6

20.2

21.1

24.6

20.3

6.1

5.1

18.5

14.9

25.0

24.9

0.0

0.0

Dr R

eddy

's La

bs.

Phar

ma

3154

537

,227

1

55,8

70

183

,867

3

7,09

7 4

4,68

0 2

3,56

9 2

8,70

2 13

8.6

168.

79.

621

.822

.818

.74.

63.

715

.112

.320

.320

.013

.614

.2

Glen

mar

k Ph

arm

aPh

arm

a74

7 2

02,7

58

67,

119

80,

853

14,

434

18,

357

7,6

50

10,

696

28.2

39.4

5.7

39.8

26.5

19.0

5.4

4.3

15.8

12.3

20.5

22.6

13.3

16.2

Ipca

Labo

rato

ries

Phar

ma

654

82,

484

31,

762

37,

683

6,2

85

8,8

41

3,5

20

4,8

70

28.1

38.9

-33.

338

.323

.316

.83.

63.

014

.010

.015

.518

.112

.617

.0

Lupi

nPh

arm

a15

91 7

14,7

30

127

,319

1

49,9

81

37,

754

71,

219

23,

461

28,

614

52.2

63.7

27.5

22.0

30.5

25.0

7.8

6.1

18.7

9.9

25.5

46.5

35.8

34.7


Sentiments improved now speak to the stakeholder?

inho

used

esig

n.in


Disclosures and Disclaimers

PhillipCapital (India) Pvt. Ltd. has three independent equity research groups: Institutional Equities, Institutional Equity Derivatives and Private Client Group. This report has been prepared by Institutional Equities Group. The views and opinions expressed in this document may or may not match or may be contrary at times with the views, estimates, rating, target price of the other equity research groups of PhillipCapital (India) Pvt. Ltd.

This report is issued by PhillipCapital (India) Pvt. Ltd. which is regulated by SEBI. PhillipCapital (India) Pvt. Ltd. is a subsidiary of Phillip (Mauritius) Pvt. Ltd. References to "PCIPL" in this report shall mean PhillipCapital (India) Pvt. Ltd unless otherwise stated. This report is prepared and distributed by PCIPL for information purposes only and neither the information contained herein nor any opinion expressed should be construed or deemed to be construed as solicitation or as offering advice for the purposes of the purchase or sale of any security, investment or derivatives. The information and opinions contained in the Report were considered by PCIPL to be valid when published. The report also contains information provided to PCIPL by third parties. The source of such information will usually be disclosed in the report. Whilst PCIPL has taken all reasonable steps to ensure that this information is correct, PCIPL does not offer any warranty as to the accuracy or complete-ness of such information. Any person placing reliance on the report to undertake trading does so entirely at his or her own risk and PCIPL does not accept any liability as a result. Securities and Derivatives markets may be subject to rapid and unexpected price movements and past performance is not necessarily an indication to future performance.

This report does not have regard to the specific investment objec-tives, financial situation and the particular needs of any specific person who may receive this report. Investors must undertake independent analysis with their own legal, tax and financial advisors and reach their own regarding the appropriateness of investing in any securities or investment strategies discussed or recommended in this report and should understand that statements regarding future prospects may not be realized. In no circumstances it be used or considered as an offer to sell or a solicitation of any offer to buy or sell the Securities mentioned in it. The information contained in the research reports may have been taken from trade and statistical services and other sources, which we believe are reliable. PhillipCapital (India) Pvt. Ltd. or any of its group/associate/affiliate companies do not guarantee that such information is accurate or complete and it should not be relied upon as such. Any opinions expressed reflect judgments at this date and are subject to change without notice

Important: These disclosures and disclaimers must be read in conjunction with the research report of which it forms part. Receipt and use of the research report is subject to all aspects of these disclosures and disclaimers. Additional information about the issuers and securities discussed in this research report is available on request.

Certifications: The research analyst(s) who prepared this research report hereby certifies that the views expressed in this research report accurately reflect the research analyst’s personal views about all of the subject issuers and/or securities, that the analyst have no known conflict of interest and no part of the research analyst’s compensation was, is or will be, directly or indirectly, related to the specific views or recommen-dations contained in this research report. The Research Analyst certifies that he /she or his / her family members does not own the stock(s) covered in this research report.

Independence: PhillipCapital (India) Pvt. Ltd. has not had an investment banking relationship with, and has not received any compensation for investment banking services from, the subject issuers in the past twelve (12) months, and PhillipCapital (India) Pvt. Ltd does not anticipate receiving or intend to seek compensation for investment banking services from the subject issuers in the next three (3) months.

PhillipCapital (India) Pvt. Ltd is not a market maker in the securities mentioned in this research report, although it or its affiliates may hold either long or short positions in such securities. PhillipCapital (India) Pvt. Ltd does not hold more than 1% of the shares of the company(ies) covered in this report.

Suitability and Risks: This research report is for informational purposes only and is not tailored to the specific investment objectives, financial situation or particular requirements of any individual recipient hereof. Certain securities may give rise to substantial risks and may not be suitable for certain investors. Each investor must make its own deter-mination as to the appropriateness of any securities referred to in this research report based upon the legal, tax and accounting considerations applicable to such investor and its own investment objectives or strate-gy, its financial situation and its investing experience. The value of any security may be positively or adversely affected by changes in foreign exchange or interest rates, as well as by other financial, economic or political factors. Past performance is not necessarily indicative of future performance or results.

Sources, Completeness and Accuracy: The material herein is based upon information obtained from sources that PCIPL and the research analyst believe to be reliable, but neither PCIPL nor the research analyst represents or guarantees that the information contained herein is accurate or complete and it should not be relied upon as such. Opinions expressed herein are current opinions as of the date appearing on this material and are subject to change without notice. Furthermore, PCIPL is under no obligation to update or keep the information current.

Copyright: The copyright in this research report belongs exclusively to PCIPL. All rights are reserved. Any unauthorized use or disclosure is prohibited. No reprinting or reproduction, in whole or in part, is permit-ted without the PCIPL’s prior consent, except that a recipient may reprint it for internal circulation only and only if it is reprinted in its entirety.

Caution: Risk of loss in trading in can be substantial. You should carefully consider whether trading is appropriate for you in light of your experience, objectives, financial resources and other relevant circumstances.

For U.S. persons only: This research report is a product of Phillip-Capital (India) Pvt Ltd. which is the employer of the research analyst(s) who has prepared the research report. The research analyst(s) preparing the research report is/are resident outside the United States (U.S.) and are not associated persons of any U.S. regulated broker-dealer and therefore the analyst(s) is/are not subject to supervision by a U.S. broker-dealer, and is/are not required to satisfy the regulatory licensing requirements of FINRA or required to otherwise comply with U.S. rules or regulations regarding, among other things, communications with a subject company, public appearances and trading securities held by a research analyst account.

This report is intended for distribution by PhillipCapital (India) Pvt Ltd. only to "Major Institutional Investors" as defined by Rule 15a-6(b)(4) of the U.S. Securities andExchange Act, 1934 (the Exchange Act) and interpretations thereof by U.S. Securities and Exchange Commission (SEC) in reliance on Rule 15a 6(a)(2). If the recipient of this report is not a Major Institutional Investor as specified above, then it should not act upon this report and return the same to the sender. Further, this report may not be copied, duplicated and/or transmitted onward to any U.S. person, which is not the Major Institutional Investor.

In reliance on the exemption from registration provided by Rule 15a-6 of the Exchange Act and interpretations thereof by the SEC in order to conduct certain business with Major Institutional Investors, PhillipCapi-tal (India) Pvt Ltd. has entered into an agreement with a U.S. registered broker-dealer, Marco Polo Securities Inc. ("Marco Polo").Transactions in securities discussed in this research report should be effected through Marco Polo or another U.S. registered broker dealer

Sentiments improved now speak to the stakeholder?in

hous

edes

ign.

in

PBGROUND VIEW GROUND VIEW 1 - 30 Apr 2015 1 - 30 Apr 2015 32

pg 22. INTERVIEW: Dr. Ganesh Natarajan, VC & CEO...

Documents

Transcript of pg 22. INTERVIEW: Dr. Ganesh Natarajan, VC & CEO...